Free Trade Zone Benefits
For companies engaged in light manufacturing activities, Central American FTZs provide significant advantages.
Light Manufacturing in Central America
Locating light manufacturing facilities in El Salvador and Costa Rica
The Central American Group can attend to the needs of light manufacturers in Central America at its Salvadoran or its Costa Rican Free Zones.
Companies that are interested in conducting light manufacturing in Central American Group facilities in El Salvador can locate their factories in either the International Free Zone or the San Marcos Free Zone. These two sites are prominent among the country’s seventeen designated duty-free areas. Salvadoran free zones also offer special tax incentives.
There are several advantages available to firms that wish to initiate and maintain light manufacturing in El Salvador. Among them are:
An open economy
Companies that engage in light manufacturing in El Salvador operate in one of the region’s most economically open countries. As a result of this openness, El Salvador is ranked sixth in all of Latin America for ease of doing business, while it is ranked second in Central America.
Additionally, El Salvador has a number of free trade agreements that give its goods preferential treatment. Some of the countries with which El Salvador has trade treaties include:
- the United States;
- the Dominican Republic
- South Korea
A strategic location
El Salvador provides a location to conduct light manufacturing in Central America that is in proximity to the United States and Mexico. It is beneficial to business in these two countries to set up high volume – low mix manufacturing in El Salvador. Some of the productive activities that El Salvador is seeking to attract are:
- automotive harness manufacturers;
- textiles manufacturers;
- producers of passive electronic components;
- assemblers of components and parts for footwear.
Light manufacturing in Central America is also performed in Costa Rica. Those companies seeking to manufacture Central America’s most economically developed nation can do so at the Central American Group’s Green Park Free Zone. Companies that establish themselves in Costa Rica enjoy:
- a well-educated workforce – The country boasts a literacy rate of 97 percent;
- political and economic stability – Costa Rica is the most stable democracy in Central America, as well as in Latin America as a whole;
- a thriving export sector – light manufacturers in Costa Rica produce and export more than 4,000 products to over 150 trading partners. Costa Rican companies manufactured goods sold for approximately US $9 billion in 2017.
- fiscal incentives – Companies that operate in the Central American Group’s Green Park enjoy income tax incentives.
- An excellent location – Light manufacturers that set up shop in Costa Rica have access to 2/3 of the global GDP through the country’s Atlantic and Pacific Ocean ports.
Due to the education level of its workforce, Costa Rica is the perfect place to engage in low volume – high mix products. Among products produced in this category are medical devices.
Companies that are seeking to begin light manufacturing in Central America should contact the Central American Group by filling in the form that is below.
Light Manufacturing Industry Outlook
The lion’s share of light manufacturing in Costa Rica is found in the country’s capital, San Jose. Other areas such as Alajuela, Heredia, and Cartago have a sizable light manufacturing sector, as well.
It is interesting to note that Costa Rica is one of the world’s foremost manufacturers of baseballs. The light manufacturing of the product takes place at the Rawlings Sporting Goods’ 54,000 square foot facility is located in the province of Cartago.
Initiating light manufacturing operations in Costa Rica makes sense. The country’s low-turnover labor force can be accessed at a competitive cost.