Embassy of El Salvador. Presentation Economic, political and social factors Business opportunities. November 2012

Transcription

1 Embassy of El Salvador Presentation Economic, political and social factors Business opportunities November

2 El Salvador Capital San Salvador Official Language Spanish Area 21,041 Km 2 / 8,124 sq mi Population 6.2 million(2011) GDP Nominal (2011) 23,054 million USD (2011) Currency $USD Time Zone UTC -6 Santa Ana Chalatenango Ahuachapán Sonsonate La Libertad San Salvador La Paz Cabañas San Vicente Usulután San Miguel Morazán La Unión Gulf of Fonseca islands

3 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & strategic location Foreign direct investment in El Salvador

4 Political Stability More than 25 years of free and democratic elections Alternating governance 80% 60% 40% 54% 54% 68% 52% 58% 51% Balance of powerin congress Other Parties 11% 9 seats 20% 0% PDC ARENA FMLN GANA 13% 11 seats Legislative Assembly ARENA 39% 33 seats President for 5 year term with no possible consecutive reelection Presidential election: % of votes for Presidential Candidate of winning party Source: Supreme Electoral Court of El Salvador (TSE ). FMLN 37% 31 seats 1 chamber with 84 seats for 3 year terms March 2012 Congress election results, seats won by each party 4

5 Central American Market Country EL SALVADOR GUATEMALA HONDURAS NICARAGUA COSTA RICA PANAMA Capital San Salvador Guatemala City Tegucigalpa Managua San Jose Panama City Central America Official Language Spanish Spanish Spanish Spanish Spanish Spanish Area ( 000 Km 2 ) Population ( 000,000) GDP PPP (Bn US$) GDP per capita PPP (US$) 7,550 5,079 4,444 3,206 11,923 14,096 6,533 Average Inflation rate Currency 3.6% 5.8% 6.0% 8.6% 5.3% 5.6% Dollar USD Quetzal GTQ Lempira HNL Cordoba NIO Time Zone UTC -6 UTC -6 UTC -6 UTC -6 UTC -6 UTC -5 Colon SJC Dollar USD 70% of the population and commerce concentrates in ES, GT, and HN. Source: Multi Purpose Household Survey, Central Reserve Banks, and IMF.

6 Fringe benefits represent 27.61% of nominal wage Sector Monthly Minimum Wage* Daily Wage Agriculture $ $ 3.50 Maquila $ $ 6.25 Industry $ $ 7.31 Commerce & Services $ $ % 120% 100% 80% 60% 40% 20% 0% Fringe Benefits 27.61% Nominal Wage 100% 1 Fringe Benefits (27.61% of nominal wage) Annual Severance Provision** 8.33% Social Security (ISSS) 7.50% Retirement Fund (AFP) 6.75% Training Fund (INSAFORP)*** 1.00% * Effective since May ** 2011 Provision in case of termination of contract *** Applies to companies with more than 10 employees Source: Ministry of Labor El Salvador Christmas Bonus 2.78% Vacations paid yearly 1.25%

7 Young Population Male 47.7% Female 52.3% Average Age (Estimates) 10.0% 5.0% 0.0% >= % 5.0% 10.0% Guatemala Honduras Nicaragua El Salvador Panama Costa Rica 20.4 years M 23.4 F 26.2 EAP: 2,641,133 Source: Multi-Purpose Household Survey 2011, CIA World Factbook 7

8 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & strategic location Foreign direct investment in El Salvador

9 International view of El Salvador Index Human Development Index (2011) Index of Economic Freedom (2012) Ease of Doing Business (2013) El Salvador Guatemala Honduras Nicaragua Costa Rica Panama Freedom in the World (2012) Free Partially Free Partially Free Partially Free Free Free Global Competitiveness Index ( ) Infrastructure Roads Airports Energy Mobile Telephones Taxes

10 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & strategic location Foreign direct investment in El Salvador

11 Legal Framework Investment Law International Services Law Equal treatment to national & international investors Liberty to transfer funds and profits abroad Access to local financing Incentives to strategic sectors (contact centers, BPO s, maintenance and repair of airplanes, logistics, etc.) Total permanent tax exemptions (income and municipal taxes) and import duties. Free Zones Law Incentives to industrial activities Total permanent taxes exemption (income and municipal taxes) and import duties. Tourism Law Requires minimum $25,000 USD investment Corporate tax exemption (income and municipal taxes) Real estate transfer tax exemption Import tax exemption

12 Commercial Openness Access to a potential market of 1,200 million people 12

13 Main Trade Partners and Export Products Main Trade Partners Other 6% United States 46% Central America 36% El Salvador Exports 2011 USD 5,308.8 million Taiwan 1% Japan 1% Dominican Republic 1% Canada 1% Mexico 2% Spain 1% Germany 3% Panama 2% Others 1% Main Export Products Apparel 35% Agriculture, agroindustry, and food agroindustry. 18% Furniture and medical devices 1% Footwear 1% Foods, beverages, tobacco and similar 8% Products of stone, ceramic and others 2% Mineral Products 3% Textiles 5% Chemical products 5% Plástics 5% Paper 5% Metal-mechanic industry, electrical equipment 11% Source: Central Reserve Bank

14 Strategic Location Close to key markets Closeness to the vital maritime routes. A natural bi-oceanic logistics corridor. Container terminal ready for post panamax ships. A dominant airport certified A1 by the FAA linking important cities. Main Freight Companies Main airlines serving El Salvador Regular charter flights Air Cargo DHL UPS Arrow Maritime MAERSK CROWLEY MSC SEABOARD NIPPON CSAV APL Hamburg Süd (Montreal, Toronto) 14

15 Strategic Location

16 Strategic Location

17 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & strategic location Foreign direct investment in El Salvador

18 Foreign Direct Investment Stock 2011 USD 8,141 million (35.3 % of GDP)

19 Investment Opportunities Specialized Textiles Aeronautics Electronics Medical Devices Offshore Business Services Health Services Tourism Agro-industry Logistics and Infrastructure Footwear

20 El Salvador offers an aircraft maintenance, repair and overhaul (MRO) industry for commercial aircraft, which has successfully placed the country on the global aviation map. The successful operations of Aeroman, a member of Canadian MRO group Aveos, are widely recognized within the emerging Latin American aeronautical clusters. Aeronautics Compliance with international certifications ensuring the highest quality required in aircraft maintenance services.

21 El Salvador: Quality in aircraft maintenance services Technical Universities and Institutes have specialized curricula developed in conjunction with the private enterprise to ensure the availability of skilled labor. In addition to maintenance services for commercial aircraft, a variety of other companies in the emerging aerospace clusters offer the following services: R44 helicopter and corporate airplane maintenance. Distribution and warehousing services for aircraft parts. Component maintenance shops. Ground Services. Light sports aircraft (LSA) airframe, wing tip, and engine part manufacturing in composite materials, etc. Aircraft harness system assembly. Refurbishment on older Light Sports Aircraft (LSA) models. A Free Trade Zone Law and an International Services Law which provides tax incentives to these types of manufacturing. Available land for the development of industrial operations next door to the International Airport of El Salvador, under Public Private Partnership (PPP) mode. Investment Opportunities in Aeronautics: Commercial aircraft maintenance service operations. R44 helicopter maintenance operations. Light Sports Aircraft (LSA) airframe part manufacturing. Painting and maintenance of commercial aircraft interiors. 7

22 For investors in agro industry and entrepreneurs who seek a platform to produce and export, El Salvador offers attractive opportunities in the following sectors: Fruit Farming Aquaculture Ornamental plant farming Food & Beverages These sectors are highly favored by good weather and easy access to regional and international markets. Agroindustry Climate, tax incentives and a platform connected to additional markets.

23 El Salvador: A production and export platform El Salvador possesses suitable climatic and soil conditions for fruit and ornamental plant farming. Suitable soil and climatic conditions for the production of a wide variety of tropical fruits. The country has optimal interconnections for the trade and transport of agro industrial products. Availability of water resources for the sustainable development of aquaculture. Negotiated trade agreements open the possibility for the sector to expand to regional and international markets. Competitive labor costs. Investment Opportunities in Agro Industry: Aquaculture Sector: Development of the production chain through the supply of young fingerlings, feed and other inputs to attain productivity and quality of aqua cultured products. Fruit Farming Sector: Development of supporting industries for the provision of supplies, equipment, quality vegetative materials and processing technology for the expansion of crops of avocado, Persian lime, coconut and organic products. Processed Foods Sector: Opportunities in the development of complementary industries in a sector in continuous growth in areas such as: packaging, process technology, machinery and equipment.

24 International medical device manufacturing companies will find in El Salvador a strategic partner to be used as a platform for export to markets in North America, Central America and the Caribbean. Medical Devices Rapid access to markets

25 El Salvador: A strategic partner in medical devices El Salvador has tax incentives that encourage the establishment of foreign companies within a regulatory framework. The country has focused on developing industrial and service parks boosting industrial growth, especially in the textile and plastics sectors. Investors enjoy rapid access to markets with a potential of 1,100 million people through the existing FTAs and thanks to its strategic location. El Salvador is a pioneer in Latin America in the training of professionals in prosthetics and orthotics, putting a highly skilled workforce at the disposal of businesses. Investment Opportunities in Medical Devices: Disposable laboratory and diagnostic equipment. Hospital linen and disposable clothing. Hospital furniture. Orthopedic products. Packing and packaging of disposable medical devices.

26 El Salvador offers a successful platform for electronic component manufacturing, with over 30 years of proven credibility. The country has experience in the manufacture of ceramic and tantalum capacitors in compliance with required international standards. This has enabled the country to acquire and implement state-of-the-art technology and know-how. The high quality, efficiency and productivity of operations in El Salvador have ensured the transfer of manufacturing plants from England, the Czech Republic, Mexico, China and the U.S., achieving continued expansion in all processes. Electronics High productivity and quality manufacturing at competitive costs.

27 El Salvador: A platform for electronic components manufacturing Setting of strategic alliances with academia to ensure availability of skilled workforce. Existence of a Law on Free Zones offering tax incentives to this type of manufacturing. E-cluster in formation around the AVX Kyocera Company in El Salvador. Wide local supply chain in place in the areas of metalworking, plastics, support systems, automation systems, engineering, transport and chemicals, among others. The best international airport in the region just 35 minutes from San Salvador, and 2.5 hours from Miami. Available land for the development of industrial operations next door to the International Airport of El Salvador under Public Private Partnership (PPP) mode. Electrical network system with strong capacity for expansion. Investment Opportunities in Electronics: Electronic component manufacturing and production. Electronic equipment and parts assembly. Cell phone electronic component repair.

28 For offshore business service firms seeking to enter markets in the U.S. and Spanishspeaking countries, El Salvador is a strategic partner for providing quality multi-region business services. Our dynamic business environment, strategic location for near-shoring, timezone complementarity and the outstanding performance of our bilingual human resources (English/Spanish), makes us a strategic platform for companies offering global services. The modern and advanced local telecommunications infrastructure ensures the delivery of quality services and costeffective location for this industry. Offshore Business Services Cost effective near-shore location, based on a state of the art telecommunications platform which guarantees your global offer.

29 El Salvador: Complementary strategic partner for multi-region operations Strategic location in relation to English-and Spanish-speaking customers (shorter flight times from North and South America). Same time zone for primary customers (U.S. and Canada) and Spanish-speaking markets (91% of the global Spanish-speaking population). Time-zone complementarity for customers in Europe and Asia (24/7 possibility). Friendly, hardworking and service-oriented people with neutral English and Spanish accents. Exceptional performance against key indicators (KPIs) such as Sales, C-Sat, FCR, etc. Complementary service to other geographical areas and highend front-office services. Young and committed workforce (60% of the population under 35 years). Cultural affinity of the workforce with priority markets. Investment Opportunities in Offshore Business Services: Voice Business Process Outsourcing (Call Centers) Non-voice Business Processes Outsourcing (BPOs) Shared Service Centers (KPOs)

30 El Salvador offers the opportunity to invest in health establishments catering to patients living in the U.S. and Canada, taking advantage of the geographical proximity to those markets, the low costs of health professionals and the fast connections between medical facilities and enviable landscape sites.. Health Services Geographical proximity to the main countries of origin of medical tourism, offering quality services at low costs

31 El Salvador: Strategic location and excellent connectivity between touristic sites The strategic location of El Salvador and the presence of TACA airline's hub in the country provide excellent air connectivity to the U.S. and Canada (2 hours from Miami and 5 hours from Los Angeles by direct flight). The best road infrastructure in the region allows visiting the wide variety of tourist attractions the country offers in a short time (beaches, lakes, volcanoes, colonial cities, etc.). The community of Salvadorans abroad, about 2 million people, is A natural market who constantly visits the country and buys health treatments locally. The existence of qualified medical professionals who have earned postgraduate degrees abroad offer their services at very competitive costs. There is a Law on International Services that encourages the establishment of health centers. Investment Opportunities in Health Services: Hospitals Specialized clinics Rehabilitation centers Medical spas Hospitals Resorts for treatment of chronic diseases.

32 El Salvador offers attractive investment opportunities to specialized textile and clothing companies wishing to enter the regional Central and North American markets based on the favorable tariff conditions of FTAs with the U.S. (CAFTA) and the European Union. El Salvador offers a vertically integrated industry, which promotes a competitive high-fashion, highturnover garment manufacturing industry. Specialized Textiles and Apparel Vertically integrated industry with easy access to markets

33 El Salvador: Specialized textile and apparel sector environment More than 260 textile and apparel companies have established themselves in the country, including internationally recognized companies such as Pettenati, George C. Moore, UNIFI, Swisstex, CS America and APS. The rule of origin granted by the CAFTA-DR Free Trade Agreement allows free access for textiles manufactured in the region with yarn produced in Central America. A cluster of companies that use synthetic fibers (nylon, polyester, micro fiber, among others products paying a 32% tariff when imported from Asia through the U.S.) is in the process of consolidation. The country offers a wide variety of services, including embroidery, industrial laundry, dyeing and finishing, cutting and packing, which have been a great support to the manufacturing operations of companies such as HBI, Fruit of the Loom, Adidas and Lacoste, among others. The evolution of the manufacturing scheme from"maquila" to"full package" has developed the supply chain through materials distribution centers, required for vertical integration and sustainability of the industry. Investment Opportunities in Specialized Textiles and Apparel: Manufacture of yarn and fabrics. Manufacture of knitted garments with accessories and embellishments(embroidery, screen printing, heat transfers, etc.). Manufacture of garments included in the Single Transformation category: bras, girl dresses, boxer shorts, sleepwear and luggage.

34 El Salvador offers attractive tourism projects in various stages of development that take advantage of a wide array of attractions located close to each other (surf spots, beaches, mountains, lakes, volcanoes). The country has a historical past inherited from the Maya, a pleasant climate all year round, competitive pricing of land, low construction costs and proximity to important markets of origin of international tourism. Tourism Surf, fishing, adventure tourism and the Maya world... all in one place.

35 El Salvador: Variety of close-by touristic attractions Tax incentives regulated by a Law on Tourism. Foreign investors have the opportunity of acquiring property intheirownname. Competitively priced land and low construction costs. Rapid access to a variety of tourist attractions. Short flight times from North and South America. The International Airport of El Salvador handles more than 470 arrivals and departures every week. Pleasant climate all year round. Warmth and friendliness in tourist service. Investment Opportunities in Tourism: Mixed-use developments. Hotels: Urban, Resort, Boutique, Bed & Breakfast, Eco-lodge, Hostels. Vacation homes. Properties with tourism potential Marinas

36 For companies producing consumer goods seeking to sell to larger markets, El Salvador, the logistics hub of Central America, provides air and seaport zones with tax incentives for manufacturing, logistics and distribution, becoming a gateway to U.S., Asian and European markets. El Salvador has the infrastructure, geographical proximity and free trade agreements to ensure easy and timely access to large markets. Logistics Easy and timely access to large markets.

37 El Salvador: Strategically located and available infrastructure Convenient location: Proximity to the trans-pacific route (connecting Asia and the Americas); proximity to the Panama Canal (1. 5 days by sea); rapid maritime access to U.S. markets on the East and West coasts; and rapid road access to the Southern and Eastern U.S. markets. Maritime infrastructure available to receive large ships: La Union Centroamericana Port with the potential to become the leading container port on the Pacific coast of Central America. Land connectivity: The port is located 371 km. away from Puerto Cortes (Honduras Atlantic Coast); 8 hours from the border with Mexico; and 34 hours from the U.S. border (Texas). Air connectivity with rapid access to U.S. markets from the International Airport of El Salvador. Approximate flight durations: Miami: 2:30 hours; Los Ángeles: 4:00 hours; Houston: 4:00 hours; New York: 5:00 hours; Panama: 1:30 hours. Puerto de Acajutla, located in Sonsonate Investment Opportunities in Logistics: Logistics activity zones in the proximity of seaports. Puerto La Unión, located in La Unión Airport logistics center Distribution centers

38 For companies producing footwear seeking to sell to larger markets, El Salvador, the logistics hub of Central America, provides air and seaport zones with tax incentives for manufacturing, logistics and distribution, becoming a gateway to U.S., Asian and European markets. El Salvador has the infrastructure, geographical proximity and free trade agreements to ensure easy and timely access to large markets. Footwear Logistics Easy and timely access to large markets. A platform to export to large markets. 38

39 El Salvador: Footwear Industry Currently: Big companies as ADOC, DURAMAS, CARICIA, GARBAL, exports to United States, Central America and The Caribbean, Europe and Asia. 16 small enterprises, primarily produce to the Salvadoran market. 390 handicraft workshops producing for the small and large companies located in San Salvador and Santa Ana. ASPC: Salvadoran Association of Footwear Producers with 125 companies of La Libertad, La Paz, La Unión, San Vicente and San Salvador. Began in the city of Santa Ana with local artisans Exports: US $42 million (12% annual growth over the last 6 years -2005/2011-). El Salvador has the 26thposition as a footwear supplier of the United States. El Salvador exports to the US market grew 28% in Source: USITC The Imports grew by 23% compared to 2010 (US $106 million) and 9% annually in the last 6 years.

40 Services provided by PROESA Information and Advisory Facilitates the evaluation process of the country by offering: Information on the business climate, economic factors, set-up and operational costs, regulations, availability of human capital and any other information required in the early stages of the evaluation process. Personalized attention to specific enquiries. Business Opportunities Advises international companies on investment opportunities in El Salvador by providing: Information on investment opportunities in strategic industries, as well as incentives and investment advantages of those industries. Statistics and customized industry information. Assistance Establishment and Expansion Works to identify contacts and locations for international investors through: Finding of specific locations and sites for each project. Facilitating contacts of potential partners, government institutions and providers of goods and services including legal, financial, customs, real estate, among others. Organization and coordination of customized site visits to El Salvador. Assists potential and established investors with: Integral support on procedures required to establish or expand business operations in the country.

41 EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR TEL Edificio D'Cora Primer Nivel, Urb. Santa Elena, Antiguo Cuscatlán, La Libertad, El Salvador, C.A.