El Salvador Has the Fastest Customs Clearance in Latin America; Here’s What That Means For Foreign Direct Investment

In December of 2025, the Inter-American Development Bank (IADB) released its flagship annual report, Markets for Development: Improving Lives Through Competition. The report benchmarks Latin American countries on market competition, administrative efficiency, regulatory costs, market concentration, and border delays, among other indicators. One section highlights customs delays across Latin America and the Caribbean. The report identifies El Salvador as having the fastest customs clearance in Latin America for exports, averaging fewer than 4 days.

Why Do Customs Delays Matter?

Customs delays create what are essentially hidden tariffs on exports, raising costs for suppliers and making them less competitive in the global marketplace. According to the IADB:

“The report found that border delays reduce export performance and inhibit efficient supply chains almost as much as tariffs and other non-tariff barriers.”

Latin America and Caribbean average: 10 days

Countries with longer delays require suppliers to wait more than 10 days before goods depart ports and cross international borders. From Panama to Peru, importers, exporters, and logistics operators face unpredictable wait times that increase costs and damage reputations with buyers.

El Salvador has the fastest customs clearance in Latin America, with a clearance time of less than 4 days.

This severely disadvantages the region for manufacturing and export operations. The longer it takes to get goods out of port and across borders, the more likely companies will look to other countries with more efficient borders.

The IADB emphasizes the importance of eliminating unnecessary administrative barriers to trade and adopting a combination of the following policy tools to streamline export processes and focus resources on high-risk shipments.

Trade facilitation mechanisms:

• Single-window system – requiring traders to complete all paperwork through one system or portal
• Risk-based inspections – focusing compliance resources on high-risk goods
• Expedited transit – allowing shipments to move cross-border without unnecessary delays or inspections

Countries that have made trade facilitation a priority already see substantial rewards. Here are the average customs delays for select Latin American countries.

Times for Customs Clearance in Latin America

• El Salvador – 3.99 Days
• Guatemala – 4.35 Days
• Honduras – 5.10 Days
• Panama – 6.09 Days
• Nicaragua – 6.57 Days
• Costa Rica – 7.85 Days
• Brazil – 14.96 Days

All other countries clocked in at over 10 days. Efforts by Central American countries to adopt digital systems and reduce red tape at the border have paid real dividends when it comes to competitiveness.

In addition to benchmarks on border delays, the report measures freight transportation as a percentage of total exports for goods headed to the United States.

In Latin America and the Caribbean, the average is 7.9%, compared with 5.8% in OECD countries. In El Salvador, the percentage is approximately 7%.

Shipping costs to the main markets explain part of the reason why Latin America lags behind in manufactured exports. The next piece of the puzzle is market concentration and competition.

A Competitive Region Could Increase GDP by up to 25%

Reforms that increase market competition to levels comparable to advanced economies could boost GDP by up to 25%, according to the report. President of the IADB Group Ilan Goldfajn states:

“When competition works, the private sector can do what it does best: create jobs, drive innovation, and deliver better outcomes for workers and consumers.”

Inefficient markets and ineffective policies lead to workers getting paid far less for what they produce. Latin American workers receive, on average, just 50% of what they produce. Compare that to 65% in the U.S. and 81% in other advanced economies.

Markets in Latin America and the Caribbean are nearly 4 times as concentrated. This environment of less competition leads to worse outcomes for productivity, innovation, job creation, and wages.

Why Faster Customs Clearance Matters for FDI

One of the reasons borders matter so much is that they impact the total supply chain and delivery costs for companies. El Salvador ranks as having the fastest customs clearance in Latin America, according to the IADB. Companies looking to expand their Latin American footprint will naturally look to invest in countries where they can rely on consistent supply chains and streamlined export processes.

No doubt El Salvador’s proximity to the US and its inclusion in CAFTA-DR make the country a more attractive place to manufacture and export goods. Faster customs clearance could be the tipping point for companies in choosing El Salvador over other Central American nations for operations.

Increasingly, global supply chains are being reshaped by geopolitical concerns, nearshoring, and the need for diversification. Companies are evaluating numerous factors when deciding where to invest, and ease of access to markets through efficient customs processes should be a priority for countries.

Efficient Customs Clearances Are Just One Part of the Puzzle

In the rush to invest in Latin American Countries many discussions on policy and competitiveness end at CAFTA. Countries cannot rest on their trade agreement credentials. Just because a country, or group of countries, has  FTAs with the US and major economies around the world does not mean companies will automatically source there.

That means investing in better infrastructure, adopting digital processes, reducing red tape, and improving administrative systems so goods can reach market quickly is of paramount importance. El Salvador has set an example for the region by achieving the fastest customs clearance in Latin America. It’s time other countries follow suit.