Deputies to replace PROESA with INVEST to promote investments in El Salvador

The Economic Commission of the Salvadoran Legislative Assembly deputies voted favorably on June 5, 2023. They resolved to draft the Law for the Creation of the Agency for the Promotion of Investments and Exports of El Salvador (INVEST). This new entity will replace the Export Promotion Agency and Investments of El Salvador (PROESA) and will be responsible for bringing new capital investment to the country.

INVEST will take the lead

INVEST will have several responsibilities. These include:

• Designing strategies and guidelines to promote El Salvador as an investment destination.
  
  
• Promoting and facilitating investments and exports.
  
  
• Implementing processes for generating human capital, innovation, and new technology.
  
  
• Supporting and designing promotion policies and strategies to improve the productivity levels of various sectors of the country
  
  
• Developing methodologies to identify investment sectors, among others.

The bill was presented on Thursday, June 1, 2023, in the Economy Committee of the Salvadoran Legislature. The session was opened to continue on June 6, 2023, with the team from the Ministry of Economy (Minec ).

Some government entities have been eliminated

While the Salvadoran Legislation is in the midst of creating INVEST, six government offices have been eliminated thus far this term in the Legislative Assembly. Among these entities is the Social Investment Fund for Local Development (FISDL). The Ministry of Local Development will absorb it. In addition, the Salvadoran Institute for Municipal Development (ISDEM) will be replaced by the National Directorate of Municipal Works (DOM), and the Salvadoran Water Authority will replace the Fund Environment of El Salvador (FONAES). Finally, the General Directorate of Statistics and Censuses (DIGESTYC) has had its functions transferred to the Central Reserve Bank (BCR) and the Maritime Port Authority (AMP).

The INVEST  will have a president appointed by the President of the Republic, an executive director, and an administrative director. The two positions mentioned above will be appointed by the President of the INVEST and a council.

The “council” will comprise the President of INVEST, a representative of the Ministry of Economy, a representative of Foreign Relations, a representative of Tourism, and three representatives of the private sector.

According to the bill, it is stipulated that all of PROESA’s assets and liabilities will be transferred to INVEST, according to the final figures of PROESA’s closing Financial Statements.

This institution has promoted exports by identifying opportunities, generating strategic market information, disseminating information for using international treaties, and monitoring the business climate.

It has also carried out dissemination and promotion activities for the products and services that make up El Salvador’s export offerings and strategies for the focused identification of strategic sectors and markets. In addition, it was the entity responsible for organizing visits by potential clients and trade missions with Salvadoran businessmen to facilitate business contacts.

Making investments in El Salvador is a good choice

Making investments in El Salvador can be an attractive choice for foreign businesses due to several significant factors. Among them are:

• Strategic Location: El Salvador is located in Central America, providing businesses with a strategic position for accessing markets in North, South, and Central America. Its proximity to major consumer markets, such as the United States, Mexico, and Brazil, can offer logistical advantages for businesses engaged in trade and export-oriented industries.
  
  
• Trade Agreements: El Salvador is part of several trade agreements facilitating market access. It is a member of the Central American Free Trade Agreement (CAFTA-DR), which grants preferential access to the United States and has trade agreements with various regional countries. These agreements can reduce barriers to trade and create opportunities for businesses.
  
  
• Dollarized Economy: El Salvador adopted the U.S. dollar as its official currency in 2001. This provides stability and predictability for foreign businesses operating in the country since it eliminates currency exchange risks and allows for easier financial planning and transactions.
  
  
• Free Trade Zones: El Salvador has established Free Trade Zones (FTZs) that offer business incentives and benefits. These zones provide tax exemptions, customs facilitation, and streamlined bureaucratic processes, attracting foreign investment, especially in manufacturing, assembly, and services.
  
  
• Skilled Workforce: El Salvador has a young and educated workforce. The country has significantly invested in education and technical training, producing a pool of skilled labor in various sectors. This can benefit businesses looking to set up operations or outsource certain services.
  
  
• Investment Incentives: The Salvadoran government has implemented various investment incentives to attract foreign businesses. These include tax exemptions, investment protection laws, streamlined business registration processes, and grants or loans for specific sectors. These incentives aim to promote economic growth and create employment opportunities.
  
  
• Growing Economy: El Salvador has experienced consistent economic growth in recent years, with a focus on diversifying its economy beyond traditional sectors like agriculture. The government has implemented policies encouraging private investment and entrepreneurship, expanding the middle class, and increasing consumer spending.

Source: elsalvador.com