FDI in El Salvador reached $142 million in the first quarter of 2023

FDI in El Salvador positively affected by improved security

FDI El Salvador reached 142 million dollars in the first quarter of 2023. This performance is because “it is a pole of investment attraction for foreign investors, in addition to having a good business and investment climate and improved security,” said the Central Reserve Bank (BCR) president, Douglas Rodríguez.

For the BCR official, FDI in El Salvador is part of the country’s economic development since it contributes to the generation of employment, the promotion of international trade, the generation of added value, and the transfer of technologies.

“Improved security has provided opportunities El Salvador has not had for decades. For example, foreign direct investment has been below average for years. However, this first quarter of 2023, FDI in El Salvador registered a flow of 142 million, that is, money from outside the country that is injected directly into the economy,” Rodríguez said in a television interview.

Likewise, the president of the BCR highlighted that the items that have grown the most are the reinvestment of profits, debt instruments, and capital contributions.

According to BCR statistics, the sectors that showed positive data for FDI in El Salvador were industry, with a total investment of 88.9 million dollars; commerce, with 80.3 million dollars; electricity, with 22.6 million dollars; and transportation, which totaled an investment of 2.5 million dollars in the first quarter of 2023.

Rodríguez foresees that these investments will continue during the year due to the improved security that has become the first driving force of the economy.

Several countries contributed to FDI inflows

By country, the primary inflows of FDI in El Salvador came from Mexico with 65.7 million dollars, Spain with 52.4 million dollars, Switzerland with 12.3 million dollars, Nicaragua with 8.7 million dollars, the Cayman Islands with 7.9 million dollars; Holland with 7.6 million dollars; and Costa Rica with 6.3 million dollars.

Some sectors that have traditionally been considered promising for FDI in El Salvador include:

Manufacturing and Export Processing Zones: El Salvador has invested in export-oriented manufacturing and has several export processing zones. These free trade zones offer incentives to foreign investors, such as tax breaks and streamlined regulatory processes, making it an attractive destination for manufacturing and export businesses.

Renewable Energy: El Salvador has moved towards diversifying its energy sources and reducing its dependence on fossil fuels. This has created opportunities for foreign investment in renewable energy projects, such as wind and solar power.

Agriculture and Agribusiness: Agriculture is a significant sector in El Salvador, and there are opportunities for FDI in areas like agribusiness, food processing, and agricultural technology.

Information Technology (IT) and Business Process Outsourcing (BPO): El Salvador has been working to establish itself as a destination for IT and BPO services. The availability of a young, skilled workforce and proximity to the United States makes it an attractive location for companies looking to outsource their operations.

Tourism: FDI in El Salvador has been promoted in its tourism sector, especially regarding eco-tourism, surfing, and cultural attractions. Hotels, resorts, and related infrastructure investments can also be promising in this sector.

Financial Services: The financial sector in El Salvador has shown growth potential. Opportunities for FDI in El Salvador may exist in banking, insurance, and related financial services.

Infrastructure and Construction: El Salvador has a growing need for infrastructure development, including roads, ports, and housing. Foreign investors can explore opportunities in construction and infrastructure projects.

Healthcare: The healthcare sector in El Salvador has been expanding, and there may be opportunities for FDI in healthcare services, pharmaceuticals, and medical equipment.

Education and Training: The demand for education and training services in El Salvador is increasing. This creates opportunities for FDI in El Salvador in higher education, vocational training, and English language instruction.

Real Estate and Property Development: As the country continues to grow and urbanize, real estate development can be an attractive area for investment.

FDI in El Salvador presents a compelling business opportunity for discerning investors. The country’s strategic location in Central America, with easy access to key markets in North and South America, positions it as an ideal gateway for international trade.

El Salvador’s commitment to economic openness and investor-friendly policies is underscored by its membership in various trade agreements and organizations, including CAFTA-DR and the World Trade Organization (WTO). The nation’s stable macroeconomic environment, highly competitive cost structure, and skilled labor force provide a solid foundation for business growth.