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Steve Colantuoni

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FDI in Costa Rica

FDI in Costa Rica is among world leaders

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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.

In the second quarter of 2023, the fDi Intelligence website, one of the leading investment promotion and economic development solution sites, published an article analyzing the countries that have shown the best economic recovery and increased foreign investment after the pandemic. Several Middle Eastern nations and FDI in Costa Rica lead the way.

Of the countries evaluated, three from the Middle East obtain the first position while FDI in Costa Rica leads Latin America and obtains fourth overall place. Costa Rica is the only Latin American country in the Top 10. In addition to a summary of FDI in these countries, this blog post will also focus on the opportunities FDI in Costa Rica offers for international investors.

Investment in the Middle East and FDI in Costa Rica stand out

The COVID-19 pandemic has considerably affected the global economy, but certain countries in the Middle East have had a remarkable economic upturn after the crisis period ended. Costa Rica, for its part, has shown resilience and offers a favorable environment for foreign investment. Now that the world has emerged from the challenges of the pandemic, it is essential to examine the opportunities that these countries offer to international investors.

Position 1 – United Arab Emirates (UAE): The United Arab Emirates leads the ranking with an outstanding economic recovery and a significant attraction for foreign investment. Its diversified economy, with a focus on sectors such as tourism, technology, and finance, has attracted massive investment. With a focus on innovation and modern infrastructure development, the UAE has built investor confidence and attracted high-end investment.

Position 2 – Saudi Arabia: In the second position, Saudi Arabia has positioned itself as an attractive destination for foreign investment. With its vision of diversifying the economy and reducing dependence on oil, the country has made significant investments in sectors such as renewable energy, technology, and manufacturing. These initiatives have attracted substantial investment and have contributed to its economic recovery.

Position 3 – Qatar: Qatar occupies the third position in this ranking, focusing on economic diversification and attracting foreign investment. The country has invested in infrastructure projects, such as organizing international sporting events and developing special economic zones. These initiatives have generated significant investments and have contributed to its economic growth.

Position 4 – Costa Rica: FDI in Costa Rica is in fourth position. The country stands out in Central America with a solid economic recovery and attractiveness for international investors. The country has experienced growth in technology, life sciences, sustainable tourism, and agribusiness. Favorable government policies, political stability, and its focus on sustainability have attracted growth and foreign direct investment and contributed to its economic development.

What does this mean for FDI in Costa Rica?

Government policies and economic stability

Middle Eastern countries and Costa Rica have implemented investment-friendly government policies and maintained remarkable economic stability. In the case of FDI in Costa Rica, the country stands out for its commitment to democracy, political stability, and respect for the rule of law. In addition, it has established a series of tax incentives and support programs for foreign investment, which has created a favorable environment for investment and business development.

Infrastructure and technology

Middle Eastern countries have been noted for their investments in modern infrastructure and cutting-edge technology. Costa Rica, for its part, has developed a solid infrastructure that includes seaports, international airports, highways, and advanced telecommunications. In addition, the country has positioned itself as a technological center in Latin America, attracting important technology companies and promoting innovation and talent development in the sector.

Growth sectors and investment opportunities

Middle Eastern countries and Costa Rica offer various investment opportunities in growing sectors. In the Middle East, renewable energy, technology, tourism, manufacturing industry, and logistics sectors stand out. In the case of FDI in Costa Rica, the technology services, agribusiness, sustainable tourism, advanced manufacturing, and financial services sectors present significant potential for growth and profitability for investors.

Human resources and specialized talent

In both the Middle East and Costa Rica, the availability of human resources and specialized talent is a critical factor in attracting foreign investment. Both regions have a qualified and trained labor force, educational institutions, and training programs that promote the development of technical and professional skills. This ensures the availability of trained and talented personnel to support the operations of foreign companies.

In the case of Costa Rica, the country has stood out for its high level of education, with a highly educated and bilingual labor force. In addition, the government has promoted the creation of training programs in strategic areas, such as technology and innovation, to further strengthen local talent’s skills.

Business environment and ease of doing business

Both the Middle Eastern countries and Costa Rica have made significant efforts to improve the business environment and make it easier to do business. They have implemented reforms to simplify administrative processes, reduce bureaucracy, and promote transparency in business procedures. These measures have generated confidence among investors and streamlined the start-up and operation of companies, facilitating the inflow of FDI in Costa Rica and the nations of the Middle East.

Sustainability and environmental commitment

Currently, sustainability and environmental commitment are increasingly essential considerations for international investors. Middle Eastern countries and Costa Rica have demonstrated a commitment to protecting the environment and promoting sustainable business practices. They have implemented policies to promote renewable energy, the conservation of natural resources, and adopting responsible production and consumption practices.

Conclusion

In conclusion, the countries of the Middle East have experienced an outstanding economic recovery and present attractive opportunities for foreign investment. At the same time, Costa Rica stands out as a country with a favorable environment for foreign direct investment and a wide range of growing sectors. Its economic stability, favorable government policies, developed infrastructure, qualified human talent, and commitment to sustainability position it as an attractive destination for international investors.

The continued implementation of favorable policies, strengthening trade relations, and fostering innovation will be critical factors in driving economic growth and attracting investment in Middle Eastern countries and FDI in Costa Rica. Both regions offer exciting opportunities for investors looking to expand their businesses and take advantage of the growth potential in dynamic markets.

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salvadoran free zone law

The Salvadoran Free Zone Law now includes food production

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Contact the Central American Group to invest in El Salvador by locating a manufacturing facility in one of the CAG free zones.

The country’s legislature has recently expanded the Salvadoran Free Zone Law to include the processed and unprocessed food sectors. Additionally, aquaculture among the sectors will be subject to favorable tax incentives.

Earlier this month, the Salvadoran Legislative Assembly approved a reform to the Law on Industrial and Commercial Free Zones to include food production, processing, and commercialization among the sectors receiving preferential tax treatment.  

The roots of El Salvador’s food processing industry can be traced back to its agricultural heritage. Historically, the nation has been known for producing coffee, sugarcane, and various fruits. The need to preserve and extend the shelf life of these products gave rise to rudimentary processing techniques such as drying, canning, and fermentation. Over time, these techniques evolved, influenced by modern technology and global market demands.

The reform of the Salvadoran law includes more than foodstuffs

The food processing industry in El Salvador is diverse, encompassing a wide range of products. Major players in this industry include both local and international companies. El Salvador’s food processing sector primarily produces processed foods, beverages, and agro-industrial products. These products. Include processed fruits and vegetables, dairy products, beverages (juices and alcoholic drinks), baked goods, and meat.

In addition to foodstuffs, the reform of the Salvadoran Free Zone Law also includes animal feed, chewing gum, and any other product or substance to make or treat food, natural or artificial, processed, semi-processed or unprocessed products intended for human ingestion and aquaculture.

Among the benefits of the reformed Salvadoran Free Zone Law is the exemption from taxes on the transfer of goods, tax on income, and municipal taxes.

A free zone is the area of the national territory where goods are allowed to enter as if they were not in the national customs territory.

The importance of the food processing industry and investment

The food processing industry is a vital contributor to El Salvador’s economy. It creates employment opportunities, from agricultural laborers to factory workers and skilled technicians. Additionally, the sector significantly drives the nation’s exports and contributes to foreign exchange earnings. Processed fruits and vegetables, for instance, are exported to regional markets and beyond. This industry also aids in adding value to raw agricultural products. This ultimately benefits farmers and enhances the agricultural supply chain.

The Economic Commission of the Legislative Assembly approved its favorable opinion on reforming the Salvadoran Free Zone Law after a visit to the Minister of Economy, María Luisa Hayem.

Although the government will prepare a regulation where, according to the official, “legal security is provided to companies,” Hayem explained that the reform of the

 is “opening up the opportunity for investment in the area of food, not only in agriculture but also in agribusiness.”

She added that the reform also includes aquaculture, which provides for “those investments in farms, breeding, and cultivation of products such as shrimp, tilapia.”

With the Salvadoran Free Zone Law reform, investment projections for the “next months are projected to be more than $200 million in the very short term.”

Food in the broad sense

In response to a question from Deputy Anabel Belloso from the FMLN party, the Economy Minister assured that the food sector has been added to the Salvadoran Free Zone Law “in a broad sense.”

“We are talking about unprocessed foods. In addition, we are talking about semi-processed and processed vegetables. As an example, we consider companies that are dedicated to growing vegetables. They can be installed inside greenhouses in free zones, allowing us to expand production. As a result, we will have local inputs that unfortunately have not been available in the past to move on to an industrial transformation through further processing.”

Challenges and Opportunities

Despite its contributions, the food processing industry in El Salvador faces several challenges. One primary concern is the need to adhere to international quality and safety standards, especially when exporting products. Ensuring food safety and compliance with regulations can be demanding, requiring investment in infrastructure, technology, and skilled personnel. Additionally, fluctuations in raw material prices and energy costs can impact the industry’s profitability. Addressing these challenges requires collaboration between government agencies, industry stakeholders, and international partners.

The food processing industry in El Salvador has ample growth opportunities. Companies can tap into domestic and international markets by focusing on innovation and product diversification. There is potential to develop value-added products that cater to changing consumer preferences, such as organic or healthier alternatives. Collaborations with research institutions and universities could facilitate the development of new processing techniques and products. Moreover, investing in sustainable practices could improve resource efficiency and contribute to environmental conservation.

Conclusion

The food processing industry in El Salvador stands as a vital pillar of the nation’s economy. It connects the country’s agricultural production to global markets. The industry reflects the nation’s adaptability and progress from its historical roots in basic preservation techniques to the modern, diverse range of products manufactured today. Challenges are present, but so are opportunities for growth through innovation, sustainability, and strategic partnerships. As El Salvador continues to evolve, its food processing industry will play an instrumental role in nourishing progress and driving economic development. Including food production under the Salvadoran Free Zone Law will do much to further the industry’s growth.

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project management services in Costa Rica

Project Management Services in Costa Rica

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Contact the Central American Group to begin starting up a manufacturing facility in Costa Rica in the Green Park Free Zone. 

Cristian Fernandez
General Director
Lean Consulting
San Jose, Costa Rica
cfernandez@leancr.com

The Central American Group: We’re fortunate to have Cristian Fernandez with us today. He’s the general director of a company called Lean Consulting. They’re located. And Christian, correct me if I’m mistaken, but I’m going to say San Jose, Costa Rica. The topic of our discussion today is project management in Costa Rica.

Christian, thanks for being with us today. Can you give us a little bit of background information on yourself and your company?

Cristian Fernandez: Sure. Okay, well, I’m a civil engineer by profession. I am the general director and founder of Lean Consulting, a Costa Rica firm that does project management. I’ve been working in project management for the last 16 or 17 years. That has been the background of my career path. I mostly specialize in life sciences and medical device facilities. Since I got started with project management in Costa Rica, I’ve been focused on those types of building construction, from the development of their planning phases to the construction phase.

The Central American Group: That’s very important because, as our listeners may or may not know, Costa Rica is the second largest exporter of medical devices in Latin America after Mexico. That being said, can you tell us some of your clients and some of the projects that you’ve done for them in the life sciences sector in Costa Rica?

Cristian Fernandez: Yes. Well, maybe I can give you the two types of clients. First, under the auspices of Lean Consulting, we have been working in the market for five years. We have worked for very important firms or companies such as Bayer, the pharmaceutical division, and a very large German group called Freudenburg Medical. We have also been working with Boston Scientific, Baxter Edwards, Life Sciences, and Creganna Medical. Currently, we’re working for a very large medical device corporation which is still confidential. We cannot mention their name yet, but it is one of the top ten major companies. So, it’s a significant client and investment going into Costa Rica. The other hat on my background experience before I founded Lean Consulting. As I mentioned in the beginning, I have a career path of around 16 or 17 years working in this type of industry. I was the project manager in Costa Rica for companies such as Abbott, Vascular, Medtronic, Phillips, Smith and Nephew.

The Central American Group: Well, that’s a very impressive slate of clients that you just communicated to us above and beyond project management in Costa Rica. Do you offer other services to your customers, and how do you add value to your efforts beyond project management?

Cristian Fernandez: Yes. Okay. This type of industry is very sophisticated, and clients require very complex services. We have understood this for many years, and we tried to apply some custom or tailor-made services for each client. We don’t limit ourselves only to project management in Costa Rica. We also try to figure out what are the true necessities of each client. For example, we provide services for design management, which is very common in the early phases of each project. It’s like some project management but more focused on the design phase, developing all the drawings. Also, there are other technical services, such as contracts and claim management. This is a fusion between the legal component of the contract and the agreement. It entails how they are structured and how they are applied during the process of construction. We also do claims management, which is more from the perspective of the changes in the agreement. Project management in Costa Rica is very dynamic. Because of this, we need to address a very specific service focused on the control and documentation of all the changes associated with the project. So those are very specific services that some clients have been requesting in the last few years.

We have been making a significant effort to promote those services because we believe they truly benefit the investors. This is the case because they come to Costa Rica looking for some serious support for their projects. Sometimes the services that other companies offer are more standardized. They limit themselves to project management in Costa Rica. We like to understand what the client truly needs in terms of their support and address those needs.

The Central American Group: Cristian, you’ve told us that you’ve been in this activity with respect to the life sciences sector for the last 16 or 17 years. Well, that creates an environment, obviously, where you’re not only able to hopefully explain to us the evolution of the life sciences sector in Costa Rica but also explain to us what you see going forward.

Cristian Fernandez: Okay, yes, it’s a very interesting question. In my humble opinion, what we have seen over these last two decades of the industry and the market around the life sciences sector is that it’s very interesting for our country. A lot of firms have been interested in starting their operations or expanding operations here in Costa Rica because of the very good conditions of the governmental tax incentives, very good labor, and the very technical and developed manpower that is found here. We have seen that this is also a very resilient and stable sector. We have seen that in the last 20 years, two major economic crises have happened. One of these was in 2008, and the second one was in 2020 due to the pandemic issue that had a worldwide impact. From our perspective, we witnessed that this sector was very stable because it was not significantly affected by those crises. The investment remained the same even in 2020. It was a surprise for us that we even saw growth in our company because of major companies’ trust in the country. That comes from several factors. It’s not only tax incentives, as I mentioned.

It’s also because of the professionalism that these companies find here. This is not only because of our stable market and the conditions the government has created. It is also reflected in the labor force. The professionals that you can find in Costa Rica are very capable from the perspective of engineering labor in all its forms. We also have all the required administrative personnel and all the different components different firms need.  These include construction companies, designers, and everything around project management in Costa Rica. The country offers a very high-end or very capable type of professional. That gives a lot of trust to these big companies that come here looking to take on big challenges and looking for sophisticated services. And I think that’s the reason why it has been so stable in the last two decades.

The Central American Group: Given the panorama of the life sciences sector you just described, what is your company’s and project management’s vision in Costa Rica for the medium to longer term?

Cristian Fernandez: Well, we have seen that the forecast appears to continue with some growth each year. The country is still looking to develop more and better conditions for investment. Regarding our perspective, we are a small firm, and we want to remain that way. Our company has just ten engineers, and we don’t expect it to become a very large firm. We are more focused on becoming great instead of big. What I mean about that is we always have in our vision to develop long-term relationships with our clients. For example, in the case of Bayer, we have been working with them for the last four years. In the case of Freudenberg Medical, we have been working with them for three years and with Boston Scientific for another four years. We truly understand their needs. We want to gain trust and develop long-term relationships. So that’s our vision for project management in Costa Rica. We like to give a very good service and rely on stability more than becoming big and focusing on our clients and not purely on sales and revenues.

The Central American Group: So, you’re describing that you like to offer boutique services to your customers. Are there any other differences that are very marked between you and the companies against which you compete?

Cristian Fernandez: Yes, I will mention a couple of them. The most significant one for us is that we specialize in this sector, in the life sciences sector. Several good or very good companies in the market provide project management services in Costa Rica. However, they are more diversified. They attend to residential, commercial, governmental buildings or facilities, or whatever. But since the beginning, the vision of Lean Consulting was to focus on a more specific sector: life sciences and industrial buildings. That’s our background. With our team and our engineers, we are all aligned with that mindset. So that’s our focus. That’s what we really understand, and we really know how to do it. So that’s why we decided to become specialists in providing project management services in Costa Rica in the life sciences market. As you know, when you become a specialist in something, you typically do better than the ones that try to do many things simultaneously. Our company is called Lean Consulting, and that is the reason. I am a true believer in the lean philosophy, including lean construction, lean manufacturing, et cetera. We truly believe in focusing on value and avoiding any waste.

We like to give the best possible service to our clients. So that’s what we try to do. We can adapt easily. We are very flexible. As you mentioned, we are a kind of boutique firm because we like to provide very specific services according to tailor-made solutions that our clients require. Those are the main differentiators of our company.

The Central American Group: You mentioned several international companies. I would imagine that in addition to that, you service the domestic market as well because most of the listeners that we get are international listeners. What value add is there for them through your company’s project management services in Costa Rica?

Cristian Fernandez: We have been working on this type of process for several years. I understand the complete cycle of when a company wants to start doing business in Costa Rica. We understand what needs to happen in each of the phases. We can take the company’s hands, guide them, and advise them on what they must do in each phase. That’s what I have been doing in the past, in my former job, before starting Lean Consulting. That’s something that I am trying to also offer to our clients. All of the advisory processes along the cycle of project management services in Costa Rica because we understand that they are coming to our country with a limited vision of what’s happening here. They don’t understand the regulations, the laws, the market, the prices, and what’s common. They need to know where good vendors are, et cetera. We understand how that works, and that’s why we like to be the partner of those clients through the entire process of project management services in Costa Rica.

The Central American Group: That’s a good overview that you’ve given us. Typically, when folks listen to these podcasts, the information that they get leads them to formulate further questions. That being the case, we like to ask the companies that we talk to number one to tell us if they have a website and what the address is. And number two, let the audience know how to reach our guests with their questions.

Cristian Fernandez: Sure. For instant responses, I would recommend sending us an email. It’s the easier way to communicate. We have an email address for that purpose it’s info@leancr.com. In that case, any questions, and I truly say this, any questions with no commitment, we can answer regarding what you need. That’s something that I always like to say to our potential clients for project management services in Costa Rica. There’s no commitment, and you just let me know where I can help you. I truly want to help you. If there’s something we can support you with our services in the future, that will be awesome. But now, if you have concerns about whom you can contact for something or if you are looking for some business park or something, just let us know. We can be your first point of contact if you require. We’re very transparent with the information that we can give you. So send us an email to the address that I mentioned

The Central American Group: I’m going to guess, given what your email address is, your website is www.leanlcr.com. Is that correct?

Cristian Fernandez: Yes, it is.

The Central American Group: Okay, thank you for speaking with us today about project management services in Costa Rica. It’s been informative and interesting.

Cristian Fernandez: Thank you for your time. It was a very big pleasure for us to have this conversation.

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industry in el salvador

Industry in El Salvador: An Overview

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Contact the Central American Group to invest in El Salvador by locating a manufacturing facility in one of the CAG free zones.

Industry in El Salvador began to develop in the 1950s. Since then, the textile and clothing industry has driven the country’s economy. Other prominent industries include plastics, furniture, food processing, beverage production, consumer goods and packaging, pharmaceuticals, and footwear.

Textile industry

The textile industry in El Salvador is considered the country’s most prominent. It is known for having a broad range of production and exports, according to the Salvadoran Chamber of the Textile Industry (CAMTEX).

Among the products manufactured by the textile industry in El Salvador are fibers, yarns, fabrics, fabrics, and clothing. The sector generates a significant number and a wide variety of jobs for the labor force in El Salvador.

According to the “Salvadoran Association of Industries” (ASI), many companies in the textile industry in El Salvador are of foreign origin. The plant’s Salvadoran workers manufacture products and export them to North America. Some multinational textile manufacturers in El Salvador include the Sara Lee Corporation, Hanes Brands, Intratex, AVX, and F&D.

Plastics Industry

The plastics industry in El Salvador is characterized by both domestic production and export-oriented manufacturing. The country produces various plastic products, including packaging materials (containers, bottles, and bags), household items, and industrial components.

El Salvador’s plastics industry has established export markets primarily in Central America and North America. The country’s strategic location within the Central American region allows relatively easier access to these markets.

Among the most important plastic manufacturers in the country are: Celpac, Ecolplast, Plásticos Salvadoreños, Indusola, Salvaplastic Internacional, and Tacoplast.

Furniture Industry

A mix of small, medium, and large-scale enterprises characterizes El Salvador’s furniture manufacturing industry. The sector has gradually evolved from traditional craft-based practices to more modern manufacturing techniques, incorporating technology and innovation to improve productivity and product quality.

Among the principal companies in the furniture industry in El Salvador are Olimpia Beds, Capri, Mobilia, Flores Lazo, Indufoam, Moblex, Capri, and Olins.

 Food Processing Industry

The food processing industry in El Salvador encompasses a wide range of activities, from basic food preservation techniques to more advanced processing methods. It involves transforming raw agricultural products into packaged and market-ready food products for local consumption and export.

Food factories that contribute to the Salvadoran economy include Diana, Molinos from El Salvador (Molsa), Harisa, and Bocadelli.   Foreign-origin food producers in El Salvador include the American company McCormick, Bimbo from Mexico, and Calvo from Spain.

Beverage Industry

The beverage industry in El Salvador is characterized by a diverse range of products, including alcoholic and non-alcoholic beverages. It features traditional drinks deeply rooted in Salvadoran culture and more contemporary offerings that align with evolving consumer preferences.

Among the products manufactured in the beverage industry in El Salvador are:

  • Alcoholic Beverages: The production of alcoholic beverages was an essential segment of the industry in El Salvador, with locally produced beers, wines, and spirits being popular choices among consumers. Some companies also engaged in the production of artisanal and craft beverages.
  • Non-Alcoholic Beverages: Non-alcoholic beverages hold a significant market share. These products include carbonated soft drinks, bottled water, fruit juices, energy drinks, and ready-to-drink teas and coffees.
  • Local and Traditional Drinks: Traditional Salvadoran beverages like horchata (a rice-based drink), ATOL (a hot corn-based drink), and fruit-based aguas frescas were integral to the beverage culture, often enjoyed by locals and tourists alike.

Among the factories and/or brands dedicated to beverage production in El Salvador, the following stand out: Livsmart de Centroamérica, Ambev, Bon Appetit, and the Mexican company, Jumex, among others.

Consumer Goods and Packaging industry

The consumer goods and packaging industry in El Salvador plays a crucial role in producing a diverse array of products for both domestic consumption and export. This industry encompassed various sectors, including the manufacturing of consumer goods, packaging materials, and related services.

The industry covers a broad spectrum of consumer goods, including household products, personal care items, cleaning products, cosmetics, and more. These goods cater to the everyday needs and preferences of the local population.

The packaging industry in El Salvador is a crucial component of the local economy. It ensures product safety, preservation, and attractiveness on the shelves. Companies specialize in producing various packaging materials, including bottles, containers, boxes, and labels.

While serving the domestic market, many companies in El Salvador’s consumer goods and packaging industry also aim to tap into export opportunities, particularly within Central America and other international markets.

Products manufactured in this industry are distributed through various channels, including supermarkets, convenience stores, wholesalers, and online platforms.

Kimberly-Clark Central America is prominent in El Salvador. Also in this segment of the economy are the foreign companies Procter & Gamble and SCA of Sweden. Domestic packaging producers include Alas Doradas, Impresora la Unión, Sigma Q, Evergreen Packaging, and Boxes and Bags.

Pharmaceutical Industry

The pharmaceutical industry in El Salvador is characterized by a mix of domestic and international players involved in various aspects of pharmaceutical production, distribution, and sales. The sector aims to provide essential medications to the local population and contribute to the healthcare system.

While domestic production is a significant aspect of the industry, El Salvador also imports pharmaceutical products, particularly specialized medications, and raw materials. Some local manufacturers export their products to neighboring countries.

Some of the predominant companies in the pharmaceutical industry in El Salvador are Laboratorio Vijosa, Laboratorios Ancalmo, Santa Lucia, Laboratorio Gamma, Laboratorio Lopez, and Laboratorio Teramed, among others.

Footwear industry

The footwear industry in El Salvador has a diverse range of products. It produces various types of footwear, including athletic shoes, casual footwear, sandals, boots, and specialized footwear for different purposes. The product range caters to various age groups, genders, and fashion preferences.

In the footwear industry, one of the most prominent factories and brands in the market is the domestic company ADOC. Foreign companies producing footwear in the country include Lee Shoes, Ricerfelli, and Hush Puppies.

Industry in El Salvador plays a significant role in the national economy. It contributes to employment, exports, and economic growth. The industrial sector in El Salvador is a primary source of employment, providing jobs to a significant portion of the population. This includes a wide range of roles, from skilled manufacturing to administrative and managerial positions.

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foreign investment option in Costa Rica

The United States recognizes the strength of the foreign investment option in Costa Rica

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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.

Costa Rica, a small country in Central America, has become a desirable destination for foreign direct investment (FDI) by manufacturers in recent years. Its strategic location, stable political climate, skilled workforce, and strong commitment to sustainability make it an ideal environment for businesses seeking to expand or establish their manufacturing operations.

The United States Department recently published a report recognizing the Central American country’s success in maintaining an attractive environment for multinational companies. According to the document, the foreign investment option in Costa Rica represents an enormous opportunity for international manufacturers.

Procomer points out why the foreign investment option in Costa Rica is a great opportunity

According to the Foreign Trade Promoter (Procomer ), the publication highlights that the country has had notable success in establishing and promoting an ecosystem of export-oriented technology companies, with providers of goods and services supporting public institutions, associated universities, and experienced human talent.

Among the other factors that make the foreign investment option in Costa Rica an attractive one are:

Investment in Education and Training:

Costa Rica prioritizes investments in education and vocational training, ensuring a continuous supply of qualified professionals for various industries. The government has actively collaborated with the private sector to develop programs that address the needs of specific industries, promoting a seamless transition of graduates into the workforce. This commitment to education is highly beneficial for manufacturers seeking to invest in a country with a steady supply of skilled labor.

Strong Infrastructure:

Costa Rica boasts a reliable and modern infrastructure, including well-maintained roads, ports, and airports. The country has invested significantly in upgrading its infrastructure, facilitating smooth transportation of goods and services domestically and for export. Manufacturers can take advantage of this infrastructure to streamline their supply chains and distribution networks.

Favorable Business Environment and Incentives:

Costa Rica offers various incentives to attract foreign investment, particularly in manufacturing. These incentives include tax benefits, grants, and other financial incentives to reduce business costs. Additionally, the government has established free trade zones, allowing manufacturers to import and export goods with minimal tariffs and customs duties, further enhancing the appeal for potential investors.

Green and Sustainable Practices:

Costa Rica has earned a global reputation for its commitment to sustainability and environmental preservation. The country generates a significant portion of its energy from renewable sources and has ambitious goals to become carbon neutral. Manufacturers seeking to align their operations with sustainable practices may find Costa Rica an ideal destination to establish eco-friendly manufacturing facilities.

Procomer offers a one-stop shop for investors

The report also highlights the importance of Procomer’s services to investors, including access to the Single Investment Window, the management of special regimes, and productive chain programs.

The Minister of Foreign Trade, Manuel Tovar Rivera, expressed his satisfaction with the results of the report, highlighting that “from the foreign trade sector we have worked and will continue to do so consistently to improve our investment climate and the competitiveness of foreign investment in Costa Rica, to be the option preferred by more multinational companies.”

“We are pleased that our main business and investor partner (the United States) recognizes our success as a strategic ally of more companies that generate employment, prosperity, and economic development in the country,” he added.

The report is available on the United States Department of State website, highlighting other Costa Rican public policy successes. Among them are:

  • Public institutions maintain strong communication channels with investors and ensure they reinvest in the country.
  • The agenda of new trade agreements promoted by the Government of the Republic favorably affect business opportunities for foreign investment in Cosa Rica.
  • The country references the best practices of the Organization for Economic Cooperation and Development (OECD) for the generation of laws and regulations, which positively impacts legal certainty and generates a culture of continuous improvement.
  • Costa Rica encourages responsible business conduct (RBC) so that companies enjoy a positive reputation as engines of economic growth inside and outside the country.
  • The country’s accounting, legal and regulatory procedures are transparent and consistent with international standards.
  • Costa Rica has a solid legal framework to protect intellectual property rights. In fact, the advances to implement said regulatory body have been recognized through the Special Report 301 of the Office of the United States Trade Representative (USTR, for its acronym in English).

The attractive business environment for the foreign investment option in Costa Rica results from a stable political climate, skilled workforce, favorable incentives, and commitment to sustainability, making it a highly sought-after destination for international manufacturers.

As the country continues to develop and invest in infrastructure and education, it will likely maintain its status as an appealing investment hub in the region and beyond. Manufacturers exploring expansion opportunities should consider Costa Rica a potential gateway to tapping into the growing Latin American and global markets while operating within a supportive and stable business environment. Potential investors are invited to consult with The Central American Group.

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ferry between el salvador and costa rica

Operations of the ferry between El Salvador and Costa Rica are set to begin

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Contact the Central American Group to invest in El Salvador by locating a manufacturing facility in one of the CAG free zones.

The ferry between El Salvador and Costa Rica will begin operations on August 10, 2023, as confirmed recently by Blue Wave Corporation, the company that will operate the new maritime transport service.

The ferry between El Salvador and Costa Rica will begin operations on August 10, 2023, as confirmed recently by Blue Wave Corporation, the company that will operate the new maritime transport service.

During the month of July, authorities from the two countries reported that, after ten years of preparations, the route between the ports of La Unión in El Salvador and Caldera, in Costa Rica, utilizing the ferry, would finally start operating in August.

“To enter into service, you must utilize a particular kind of ship. It just so happens that we had one operating in a Mediterranean port that meets the required characteristics and technical requirements suitable for an El Salvador to Cosa Rica route. This is the case because the tides and currents are unique but similar in the two ports,” said Michael Volks, CEO of Blue Wave Corporation.

“There is no ferry industry. It is a completely new mode of transportation that requires many details that must be addressed and worked out to be ready for when the ferry arrives; that’s why the project has been delayed,” explained Volks.

According to the executive, the company will have its administrative offices in Panama and the headquarters of operations in the port of La Unión.

Rates for the ferry between El Salvador and Costa Rica

Blue Wave Corporation indicated that there will be two departures from the port of La Unión to Puerto Caldera in Costa Rica. These will take place on Mondays and Thursdays. If there is demand, they will add a third weekly round trip. The voyage is expected to last 24 hours; the company estimates that the current journey by road takes around five days. The charges will be $1,145 (low category) for trucks of lesser weight and length and $1,360 for larger units (high category).

Regarding the charges, Raúl Alfaro, representative of the Salvadoran Association of International Cargo Carriers (ASTIC), expressed his doubts since, as they understand, the $1,360 charge will apply to 40-foot units. Still, they handle 48-foot and 53-foot containers, so they are unsure how much they will charge. Currently, freight to Costa Rica costs between $1,400 and $1,500. “If I get on the ferry, I will be charged $800 for the land portion of the trip (from San Salvador to the port of La Unión and from the Caldera port to San José). That means the freight will increase for the exporter,” Alfaro estimated.

With this increase, the total freight (maritime plus land) would cost approximately $2,160, according to the company’s estimates for the difference.

For ASTIC, it will also be necessary to consider the time it will take to get to the port of La Unión and the hours it will take to disembark from Puerto Caldera, a saturated port. Regarding this point, the ferry operating company said that the dock planned for the ferry is not the problem, but the entrance through the channel and the availability of the pilot who must assist with the docking. The concessionaire will help “define the ideal docking windows for the operation.”

Alfaro estimates that due to these situations, the cargo that goes by ferry will arrive in around three days versus the four days it takes by road. “The current problem is delays at the borders,” he said.

We are not opposed as a transport sector,” Alfaro insisted. However, he criticized that the income that previously went to national transport companies will now go to a foreign company. ASTIC estimates that for each trip they make via the ferry between El Salvador and Costa Rica, the domestic cargo transport sector will lose $600.

El Salvador’s Autonomous Executive Port Commission (CEPA) began talking about a project for a ferry between El Salvador and Costa Rica in 2013 when Alberto Arene chaired this public company. The idea was to connect the port of La Unión with Puerto Corinto in Nicaragua. That year, the extinct Maritime Port Authority (AMP) approved the first list of rates for the ferry. Over time, several companies showed interest in offering the service, but the project did not prosper. Therefore, CEPA began talks with the Costa Rican authorities.

Ferry operations will benefit both countries

It is expected that the ferry between El Salvador and Costa Rica will result in the following benefits:

Improved Connectivity: A ferry between the two countries would enhance transportation multimodal connectivity, providing an alternative travel option to move cargo between El Salvador and Costa Rica without using land routes.

Trade and Commerce: The ferry service could facilitate the movement of goods and products between the two countries, potentially promoting bilateral trade and economic cooperation.

Time and Cost Savings: For shippers, a ferry service could save time compared to traveling overland, It could be a more cost-effective option for those who prefer not to drive long distances.

Environmental Impact: Depending on the efficiency and energy sources of the ferry between El Salvador and Costa Rica, it could be a more environmentally friendly mode of transportation than shipping by ground.

Redundancy and Resilience: Establishing a ferry service provides an additional transportation option, adding redundancy to the overall transportation network and improving regional resilience against disruptions caused by natural disasters or other emergencies.

It’s important to note that the actual benefits would depend on various factors, including the frequency and reliability of the ferry service, its capacity, safety measures, environmental considerations, and the level of interest and demand from travelers and businesses in both countries.

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technological development in costa rica

Technological development in Costa Rica: a current perspective

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Technological development in Costa Rica is crucial to its economic growth and plays a significant role in shaping the country’s progress and competitiveness in the global market. Over the past few decades, Costa Rica has recognized the importance of embracing technology and innovation to diversify its economy and improve living standards.

How has Costa Rica managed to advance in this area?

Connectivity and Internet access

Although, as of September 2021, the percentage of Costa Rica’s population with access to high-speed Internet stood at approximately 45% to 50%, high-speed Internet access has been a priority for the Costa Rican government. The expansion of infrastructure and initiatives to bring Internet access to rural areas have allowed many Costa Ricans to access information and opportunities online. This has fueled online sales growth and lets local businesses expand their reach.

Investments in technology and education

Costa Rica has made significant investments in technology and education. These investments have translated into the development of a highly skilled workforce and growth in the number of technology companies.

The Costa Rican government has promoted the creation of technology parks and free zones that house national and international companies, promoting innovation and economic development. Technological development in Costa Rica is evidenced by the in-country presence of several globally recognized firms. Among them are:

Intel Corporation: Intel is one of the most prominent technology companies in Costa Rica. They established a significant manufacturing and assembly operation in the country, producing microprocessors and other electronic components.

Hewlett-Packard (HP): HP has a presence in Costa Rica with customer support, technology services, and business process outsourcing operations.

IBM: IBM has a technology services delivery center in Costa Rica, providing IT services and support to clients worldwide.

Amazon: The e-commerce giant Amazon has customer service centers in Costa Rica, supporting its customers in different regions.

Accenture: Accenture, a global management consulting and professional services firm, has a delivery center in Costa Rica, providing technology and business solutions to clients.

Microsoft: Microsoft has a presence in Costa Rica, primarily focused on customer support and services.

VMware: VMware, a leading software company specializing in virtualization and cloud infrastructure, has a presence in Costa Rica.

Infosys: Infosys, an IT services and consulting company, has set up a technology delivery center in Costa Rica.

Sykes Enterprises: Sykes, a multinational business process outsourcing company, has a significant presence in Costa Rica, providing customer support and services for various clients.

Cognizant: Cognizant, a multinational IT services and consulting company, has a delivery center in Costa Rica.

Intelixit: A Costa Rican software development company providing IT solutions and services.

GFT Technologies: GFT is a global IT services and software engineering company with a presence in Costa Rica.

Development of technological startups

In recent years, Costa Rica has experienced a boom in technology startups. These startups span various industries, including software development, artificial intelligence, renewable energy, and biotechnology.

The Costa Rican startup ecosystem has been supported by several government and private programs that offer financing, training, and resources to help companies grow and prosper. Some of the programs that foster technological development in Costa Rica include:

Law 7799 for the Promotion of Competitiveness and Innovation: This law promotes research, development, and innovation activities in Costa Rica. It offers tax incentives for research and development (R&D) companies. Eligible companies can deduct a percentage of their R&D expenses from their income tax.

Seed Capital Fund: The Costa Rican government has established a Seed Capital Fund (Fondo de Capital Semilla) to support early-stage startups. This fund provides financial resources and investments to innovative startups, helping them grow and develop their ideas.

Acceleration and Incubation Programs: Several public and private organizations run acceleration and incubation programs to support startups. These programs offer mentorship, training, office space, and access to networks and investors, helping startups to develop their business ideas and become more competitive.

Booming digital marketing

Technological development in Costa Rica has resulted in an environment in which digital marketing has gained significant importance. This state of affairs is thanks to the growing penetration of the Internet and the widespread use of social networks.

Costa Rican companies have adopted various digital marketing strategies, such as online advertising, content marketing, and social media, to reach new customers and stay competitive in the global marketplace.

Impact of technological development in Costa Rica on society

The growth in technology and marketing in Costa Rica has significantly impacted society. Digitization has generated greater inclusion and access to information and employment opportunities.

Likewise, education in technology has allowed many young Costa Ricans to acquire valuable skills that will enable them to compete in the global labor market. The country’s commitment to technology education is reflected in its efforts to improve the overall digital literacy of its population. Costa Rica has been working to close the digital divide and increase access to technology and information for all citizens, further enhancing the technology education landscape in the country.

Challenges and opportunities

Despite the advances in technological development in Costa Rica, there are still challenges that the country must face. The digital divide, especially in rural areas and low-income communities, remains an issue that requires continued attention.

In addition, it is essential to focus on the education and training of the Costa Rican workforce to ensure that the workers’ skills are aligned with the market’s demands.

On the other hand, Costa Rica also faces significant opportunities in the technological and marketing field. As the country continues to develop its digital infrastructure and support startups, there is great potential for economic growth and job creation.

Additionally, by strengthening the online presence of local businesses and expanding their reach in the global marketplace, Costa Rican companies can increase their competitiveness and generate higher revenues.

Undoubtedly, Costa Rica has experienced remarkable technological development in a reasonably short time. The country has positioned itself as an important benchmark in Latin America through investments in education and digital infrastructure.

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electronic invoicing in El Salvador

Close to four hundred companies are already authorized to issue electronic invoices in El Salvador

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According to El Salvador’s Chamber of Commerce president, adopting electronic invoices in El Salvador is a gradual process that could take up to 3 years to complete.

Almost a year after the deputies of the Salvadoran Legislative Assembly approved a series of modifications to the Tax Code to incorporate electronic invoicing in the country, a sizable number of companies have already registered and obtained the necessary authorization to issue this type of document.

According to the data reflected by the official electronic invoicing site, 395 companies are currently issuing electronic invoices in El Salvador through Electronic Tax Documents (DTE), which are digital records that give validity to the transactions carried out by these companies with their customers.

Large companies implemented electronic invoicing in El Salvador on July 1

According to the tax law expert Max Mojica, “the Ministry of Finance notified certain large companies within the first quarter of 2023 that they were obliged as of July 1 to start with the electronic billing system in the country.

This can be confirmed with the data from authorized companies since by the last week of March, only seventy-nine companies issuing these DTEs had registered, while to date, the number of companies set up to issue electronic invoices in El Salvador has increased fivefold.

Even so, to date, not all companies are required to issue this type of billing because, as the expert has previously explained, the first to adhere to this law would be companies with annual sales of more than $10 million. Medium and small companies with much lower sales will be required to utilize the system over time.

Even so, the Treasury of El Salvador has yet to publish any date or schedule for adopting electronic invoicing on the program’s official portal (www.factura.gob.sv). This website serves businesspeople as a resource to know when they should start issuing electronic invoices in El Salvador.

Even so, Mojica points out that “it is a plan that is not going to stop because the Treasury is going to notify another segment of the large companies so that it applies the system and thus it will progress, layer by layer until it reaches the micro, small, and medium-sized companies, and the professional business class.”

However, the lack of a schedule for fully implementing electronic invoices in El Salvador is not an obstacle for a company that invoices less than $10 million to want to start issuing these DTEs, since many of the 395 already authorized companies have registered voluntarily. The list of large companies and people who offer professional services implementing the program can be found on the official site.

Companies are preparing to issue electronic invoices in El Salvador

For his part, the president of the Chamber of Commerce and Industry of El Salvador (Camarasal), Jorge Hasbún, agreed that medium-sized and small companies have not yet received confirmation of when they must adopt electronic invoicing on a mandatory basis. In terms of information and training, these companies are being supported so that they are ready when they receive the notification from the Ministry of Finance.

In this sense, the representative of the commerce sector also indicated that the process is gradual because different classes of businesses must adopt it until reaching micro and small companies. Such entities represent up to 80% of the business sector in the country.

Due to the above, Hasbún compared the case of Guatemala, where this type of billing already exists. He points out that, as in that country, the process could be completed in about three years in El Salvador because the implementation of electronic invoices in El Salvador will be staggered.

Electronic invoicing will be universal by 2024

The latter, however, could be completed sooner, according to tax expert Max Mojica, who considers that “at some point in 2024, probably by the end, we will all be required to be invoicing electronically.”

Even so, the president of Camarasal points out that implementing the electronic invoices in El Salvador “is a modernization that, although for the moment it will mean a little extra work, will eventually make it easier for companies to operate.”

Likewise, on the side of tax collection, which has fallen in the first months of the year for 2022, Hasbún points out that the impact will only be seen if the companies that begin to issue the electronic invoices do not invoice with the system still in force. He adds, “In general, if a company was invoicing and keeping its accounting up to date, the only thing this change will do is facilitate processes.”

This facilitation, according to the government, “will make it possible to move the physical structure of the documents issued in tax operations to a functional electronic system, which has the same legal support as the physical documents,” something that, according to the Treasury also facilitates compliance with tax obligations for companies, as well as the issuance and storage of documents of this type.

According to the official site, the Treasury has received over three million Electronic Tax Documents.

 

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foreign investment in Central America

Costa Rica establishes itself as a magnet for foreign investment in Central America

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Foreign direct investment (FDI) inflows to Costa Rica reached $3.7 billion in 2022. This information regarding foreign investment in Central America was presented in a report by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) on July 10, 2023. Recent data demonstrate that reinvestments of existing companies and the medical device sector have played a substantial role in this growth in FDI.

Costa Rica is a magnet for foreign investment in Central America

Costa Rica established itself as Central America’s primary recipient of foreign investment. The country has reached the highest flow in the region for three consecutive years. This is according to the annual report entitled Foreign Direct Investment in Latin America and the Caribbean 2023, which was presented on Monday, July 10, by the Economic Commission for Latin America and the Caribbean (ECLAC).

Last year, capital inflows and reinvestments in Costa Rica reached $3.7 billion; in 2021, the figure was $3.5 billion. These amounts exceeded the $2.5 billion that entered Panama, a country that ranked second in 2022, and the $3.5 billion received by Guatemala. in 2021.

The executive secretary of CEPAL, José Manuel Salazar Xirinachs, explained that Costa Rica experienced a slight growth of 2% from 2021 to 2022 but stressed that it remained in the lead for foreign investment in Central America. In addition, he added that Guatemala registered a more pronounced fall due to an exceptional result in 2021, although it eventually returned to its historical levels of investment.

Salazar Xirinachs expressed that Costa Rica’s success in bringing investment to Central America has to do with the fact that the country has solid foreign direct investment policies and systematic programs in place to promote the country.

Reinvestment of profits is a significant portion of new FDI

According to the report, regarding the components of FDI in Costa Rica, the reinvestment of profits (companies already installed in the country and that reinvest additional money) was the one with the most significant weight, with 71% of the total and a growth of 30% compared to 2021.

On the other hand, capital contributions concentrated 18% of the total, and loans between companies represented 12% of the annual record. However, both dropped 28% and 39%, respectively, compared to the data for 2021.

Salazar Xirinachs highlighted the importance of having a “critical mass” in the country, referring to the medical device sector. Medical devices make up Costa Rica’s main class of export. The country is home to more than 50 multinational companies in its national territory. Costa Rica has attracted many medical device manufacturers due to its skilled workforce, favorable business environment, and proximity to major markets. The country has established itself as a prominent player in the medical device industry in Latin America.

In fact, Costa Rica stood out as the leading destination for foreign investment in Central America and Latin America in the medical device sector. It successfully attracted 52% of the total amount, according to the annual ECLAC report.

In addition, the executive secretary of ECLAC emphasized the growth of the services sector, which represents 25% of Costa Rican total exports. He explained that once a critical mass of multinationals is established, the reinvestment of profits by these companies becomes one of the main drivers of economic growth and foreign investment in Central America.

As a result of this dynamism, most of the investments were directed toward the manufacturing sector (68% of the total). This result was due mainly to the behavior of the medical devices sector, while investments in services represented the remaining 32%.

According to the report, the United States is the origin of most of the investments received by Costa Rica, with 73% of the total. The country’s advantageous geographical location mainly explains this. There was also an increase in investments from Switzerland (9%), as well as from other countries such as Colombia (3%) and Mexico (2%).

Growth in Latin America and the Caribbean

At the regional level, in 2022, $225 billion of foreign direct investment (FDI) entered Latin America and the Caribbean. This figure is 55.2% higher than that registered in 2021, and the highest value since records have been kept, according to the ECLAC report.

This dynamic is consistent with the recovery after the pandemic and responds mainly to the increase in FDI in countries like Brazil. It is also due to the growth of all the components of FDI, especially the reinvestment of profits and the rise in FDI in the service sector.

Since 2013, FDI inflows in Latin American and Caribbean countries have been at most $200 billion. The weight of these flows in regional GDP also increased in 2022, reaching 4.0%. Brazil was the leading country, with 41% of the total, according to the ECLAC document.

The executive secretary of ECLAC emphasized that there are incentives that promote FDI in the countries of the region, including effective development policies in the area of science, human resources, and cluster initiatives, as well as the need to strengthen FDI agencies and the creation of incentives such as special economic zones, among others.

This year’s ECLAC report comes at a particularly turbulent time for Costa Rica regarding investment attraction policies.

President Rodrigo Chaves’s government decided on May 3, 2023, to unilaterally break the agreement to attract foreign investment through the Costa Rican Coalition for Development Initiatives (CINDE). CINDE is a private, apolitical, and non-profit organization that advises and guides international companies to establish or expand their operations in Costa Rica.

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incentives for the technology industry in El Salvador

What are the incentives for the technology industry in El Salvador?

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Full tax exemptions are included in the package of incentives for the technology industry in El Salvador.

This past April, El Salvador passed legislation that promises to give tax incentives for 15 years to new investments in programming, software, computer services, and drone parts, among other related industries.

Incentives for the technology industry in El Salvador are outlined in a recently passed law

The draft Law for the Promotion of Innovation and Technology Manufacturing was studied by the Economic Commission of the Legislative Assembly and was passed. It offers:

  • Total exemption from Income Tax (ISR) regarding incentivized activities.
  • Exemption of ISR withholdings.
  • Full exemption from municipal taxes on the declared net assets.
  • Exemption from the payment of capital gains and total exemption from the payment of Import Tariff Duties (DAI) for goods of the benefited activity.

However, the following are excluded from the law’s benefits:

  • Investments before the law’s entry into force, those related to already established operations, or those derived from mergers or restructuring.
  • People or companies benefiting from other special tax regimes such as industrial and commercialization free zones and international service centers.

Incentives for the technology industry in El Salvador will be granted to people or companies, domestic or foreign, that make new investments in innovation or technological manufacturing, such as the following:

  1. Programming, management, maintenance, consulting, and analysis of computer systems or software.
  2. Development and commercialization of cloud computing and data flow services, artificial intelligence, big data analysis, distributed ledger technology, and cybersecurity solutions.
  3. Technologies based on manufacturing parts, materials, equipment or facilities, and assembly (manufacturing plants for technological equipment or hardware, semiconductors, communications technology, robotics, nanotechnology, aircraft, and unmanned vehicles).
  4. Engineering and systems technologies necessary to integrate basic industrial technologies into global production chains.

The beneficiaries of the incentives for the technology industry in El Salvador will be required to obtain a Qualification Agreement issued by El Salvador’s Ministry of Economy. The new regulations will define the conditions for obtaining this document. Investors must keep separate accounting records to reliably demonstrate and verify the amount of income subject to tax incentives.

The Ministry of Economy may impose sanctions if investors apply the incentives granted in unrelated activities. In addition, companies and investors may also be cited if they use the declared assets differently than originally proposed or provide false information. The sanctions range from 2 to 20 minimum wages in the commercial sector and up to $7,300 in the  services sector,

The law that grants incentives for the technology industry in El Salvador assumes the existence of an Authority that will regulate its application, issue qualification agreements, carry out inspections, promote agility in supply chains, and create a National Registry of Technological Innovation and Manufacturing Industries Companies. It also allows bilateral agreements with other countries and multinational companies to “make joint investments in research and industrial development” in innovation and technology manufacturing.

Technology investment in El Salvador can help the country to develop

The development of technology has the potential to benefit the economy of El Salvador in several ways significantly:

Increased productivity: Technology can automate manual tasks, streamline processes, and improve efficiency, leading to increased productivity. This can result in higher output levels and economic growth. For example, adopting advanced manufacturing technologies can enhance the production capabilities of El Salvador’s industries, such as textiles, electronics, and food processing.

Innovation and entrepreneurship: Technological advancements foster innovation and entrepreneurship by providing new business opportunities. The emergence of digital platforms and e-commerce opens up avenues for Salvadoran entrepreneurs to start online businesses and reach global markets. This can spur job creation, attract investments, and contribute to economic development.

Enhanced connectivity: Technology enables better connectivity, both domestically and internationally. Improved internet infrastructure and access to high-speed internet can connect Salvadorans to global knowledge networks, online marketplaces, and educational resources. This connectivity can empower individuals, facilitate knowledge-sharing, and create opportunities for remote work and digital services.

Digital financial services: The expansion of technology allows for the development of digital financial services, such as mobile banking and digital payment systems. These innovations can increase financial inclusion by providing access to banking services for previously unbanked populations, and in El Salvador, adopting cryptocurrencies, such as Bitcoin, as legal tender can also foster financial innovation and attract investments in the technology sector.

Tourism and marketing: Technology can play a vital role in promoting El Salvador as a tourist destination. Digital marketing strategies, social media platforms, and online booking systems can effectively reach potential tourists and showcase the country’s natural beauty, cultural heritage, and attractions. This can boost the tourism industry, generate revenue, and create employment opportunities.

Skill development and education: Technological advancements require a skilled workforce. By investing in education and training programs focused on technology and digital skills, El Salvador can develop a competent workforce capable of leveraging technology for economic growth. Additionally, online learning platforms can provide accessible and affordable education opportunities to Salvadorans, equipping them with the necessary skills for the digital economy.

It’s important to note that successfully integrating technology into the Salvadoran economy will require supportive policies, infrastructure development, and investment in research and development. These factors, combined with the potential benefits outlined above, can contribute to the overall economic development of El Salvador.

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