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El Salvador a Country of Opportunities- Country Presentation - December 2013
1. A country of opportunities
December 2013
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
2. El Salvador
Capital
San Salvador
Official Language
Spanish
Area
21,041 Km2 / 8,124 sq mi
Population
6.2 million (2012)
GDP Nominal (2012)
23,865 million USD (2012)
Currency
$USD
Time Zone
UTC -6
Chalatenango
Santa
Ana
Cabañas
Ahuachapán
EL SALVADOR
San
Salvador
Sonsonate
La
Libertad
La Paz
Morazán
San
Vicente
Usulután
San
Miguel
La
Unión
Gulf of
Fonseca
islands
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
3. El Salvador
•
Solid economic environment
•
International view of El Salvador
•
Commercial openness & strategic location
•
Investment Opportunities in El Salvador
3
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
4. Central American Market
Central
America
Country
EL SALVADOR
GUATEMALA
HONDURAS
NICARAGUA
COSTA RICA
PANAMA
San Salvador
Guatemala City
Tegucigalpa
Managua
San Jose
Panama City
Spanish
Spanish
Spanish
Spanish
Spanish
Spanish
Area (‘000 Km2)
21.0
108.9
112.1
130.4
51.1
75.4
498.9
Population (‘000,000)
6.2
15.1
8.2
6.0
4.7
3.7
43.8
GDP PPP 2012
(Bn USD)
46.3
78.7
37.8
26.7
58.8
57.1
305.4
GDP per capita PPP (USD)
7,438
5,209
4,610
4,458
12,606
15,617
6,966.2
Average inflation rate
2008-2012
2.7%
4.8%
6.3%
8.8%
6.6%
4.9%
Currency
Dollar
USD
Quetzal
GTQ
Lempira
HNL
Cordoba
NIO
Colon
SJC
Dollar
USD
Time Zone
UTC -6
UTC -6
UTC -6
UTC -6
UTC -6
UTC -5
Capital
Official Language
70% of the population and commerce
concentrates in ES, GT, and HN.
Source: Multi –Purpose Household Survey,
Central Reserve Banks, and IMF.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
5. Fringe benefits
represent 19.28% of nominal wage
140%
Fringe Benefits + Annual
Severance Provision
27.61%
120%
Sector
Monthly
Minimum Wage*
Daily Wage
100%
Agriculture
$ 109.20
$ 3.64
80%
Maquila
$ 195.00
$ 6.50
Industry
$ 228.00
$ 7.60
Commerce & Services
$ 233.10
$ 7.77
60%
Nominal
Wage
100%
40%
20%
0%
1
Fringe benefits paid by the employer (19.28% of nominal wage)
Social Security (ISSS)
7.50%
Retirement Fund
(AFP)
6.75%
Christmas
Bonus
* Effective since July 2013
** Provision in case of termination of contract
*** Applies to companies with more than 10 employees
Source: Ministry of Labor El Salvador
Annual Severance
Provision**
8.33%
2.78%
Training Fund
(INSAFORP)***
1.00%
Vacations paid yearly
1.25%
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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6. Young Population
Female
52.8%
Male
47.2%
Average Age
(Estimates)
20.7 years
Guatemala
>= 70
65 - 69
60 - 64
Honduras
50 - 54
45 - 49
21.6
Nicaragua
55 - 59
23.7
40 - 44
M 23.7
El Salvador
35 - 39
30 - 34
25 - 29
25.1
Panama
28.0
Costa Rica
20 - 24
F 26.6
29.6
15 - 19
10 - 14
5-9
0-4
15.0%
10.0%
5.0%
0.0%
0
0.0%
5.0%
10.0%
10
20
15.0%
EAP: 2,724,754
Source: Multi-Purpose Household Survey 2012, CIA World Factbook
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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7. El Salvador
•
Solid political & economic environment
•
International view of El Salvador
•
Commercial openness & strategic location
•
Investment Opportunities in El Salvador
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
8. International view of El Salvador
Index
El Salvador
Guatemala
Honduras
Nicaragua
Costa Rica
Panama
Human Development
Index (2012)
107
133
120
129
62
59
Index of Economic
Freedom (2013)
53
85
96
110
49
71
Ease of Doing Business
(2014)
118
79
129
124
102
55
Freedom in the World
(2013)
Free
Partially
Free
Partially Free
Partially
Free
Free
Free
97
86
111
99
54
40
88
72
58
56
31
61
129
78
90
71
32
85
135
115
114
97
102
80
88
105
79
99
107
132
129
76
125
57
42
125
47
37
48
5
4
89
Rankings (2013-2014)
• Global
Competitiveness
• Procedures to start
a business
• Infrastructure
• Roads
• Airports
• Mobile Telephones
• Taxes
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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9. El Salvador
•
Solid political & economic environment
•
International view of El Salvador
•
Commercial openness & strategic location
•
Investment Opportunities in El Salvador
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
10. Legal Framework
Investment Law
• Equal treatment to national & international investors
• Liberty to transfer funds and profits abroad
• Access to local financing
International
Services Law
Free Zones Law
• 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.
• Incentives to industrial activities
• Tax exemptions (income, municipal taxes and real estate
transfers) and import duties.
Tourism Law
• Incentives to industrial activities
• Total permanent taxes exemption (income and municipal
taxes) and import duties.
Renewable
Energy
Incentives Law
• Customs duties exemption on imports of machinery, equipment and
materials
• Income tax exemption for a period of 5 to 10 years
• Total tax exemption on revenues from the sale of Certified Emission
Reductions
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
11. Commercial Openness
Access to a potential market of
1,200 million people
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
12. Main Trade Partners and Export Products
Main Trade Partners*
El Salvador Exports 2012
USD 6,659 million
United States
46%
Others
5%
Goods: USD 5,339 million
Services: USD 1,320 million
Japan
1%
Chile
1%
Canada
Central America
38%
1%
Germany Spain
1%
1%
Mexico
Dominican
2%
Republic
Panama
2%
2%
Main Export Products*
Apparel
37%
Agroindustry
16%
Food and
beverages
8%
Others
5%
Mineral
products
4%
Textiles
4%
Source: Central Reserve Bank
Chemical products
5%
Machinery and Metal-mechanic
mechanical
industry
products
5%
5%
*The trade partners and export products´ share are calculated as a percentage of
total goods exports for 2012.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Plastics and rubber
Paper products 6%
5%
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13. 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.
• Direct flights to 33 different
destinations and excellent air
traffic connections.
Main airlines serving
El Salvador
Main Freight Companies
Air Cargo
Maritime
• DHL
• UPS
• Arrow
•
•
•
•
MAERSK
CROWLEY
MSC
SEABOARD
•
•
•
•
NIPPON
CSAV
APL
Hamburg Süd
Regular charter
flights
(Montreal, Toronto)
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
16. El Salvador
•
Solid political & economic environment
•
International view of El Salvador
•
Commercial openness & strategic location
•
Investment Opportunities in El Salvador
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
17. Foreign Direct Investment
Stock 2012 USD 8,634.9 million (36.2 % of GDP)
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
19. 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.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
20. 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.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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21. 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.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
22. 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.
• 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.
• The country has optimal interconnections for the trade and
• Competitive labor costs.
transport of agro industrial products.
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
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such as: packaging, process technology, machinery and equipment.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
23. 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
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
24. El Salvador:
A strategic partner in medical devices
• El Salvador has tax incentives that encourage the
establishment of foreign companies within a regulatory
framework.
• Investors enjoy rapid access to markets with a potential of
1,200 million people through the existing FTAs and thanks to
its strategic location.
• The country has focused on developing industrial and service
parks boosting industrial growth, especially in the textile and
plastics sectors.
• 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.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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25. 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.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
26. 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.
• The best international airport in the region just 35 minutes from
San Salvador, and 2.5 hours from Miami.
• Wide local supply chain in place in the areas of metalworking,
plastics, support systems, automation systems, engineering,
transport and chemicals, among others.
• 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.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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27. 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.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
28. 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).
• Exceptional performance against key indicators (KPIs) such as
Sales, C-Sat, FCR, etc.
• Same time zone for primary customers (U.S. and Canada) and
Spanish-speaking markets (91% of the global Spanish-speaking
population).
• Complementary service to other geographical areas and highend front-office services.
• Time-zone complementarity for customers in Europe and Asia
(24/7 possibility).
• Young and committed workforce (60% of the population under
35 years).
• Cultural affinity of the workforce with priority markets.
• Friendly, hardworking and service-oriented people with neutral
English and Spanish accents.
Investment Opportunities in Offshore Business Services:
• Voice Business Process Outsourcing (Call Centers)
• Non-voice Business Processes Outsourcing (BPOs)
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• Shared Service Centers (KPOs)
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
29. 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
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
30. 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.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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31. 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
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
32. 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.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
33. 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.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
34. El Salvador:
Variety of close-by touristic attractions
•
Tax incentives regulated by a Law on Tourism.
• Short flight times from North and South America.
• Foreign investors have the opportunity of acquiring property
in their own name.
• The International Airport of El Salvador handles more than
470 arrivals and departures every week.
• Competitively priced land and low construction costs.
• Pleasant climate all year round.
• Rapid access to a variety of tourist attractions.
• 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
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• Marinas
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
35. 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.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
36. 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.
Puerto de Acajutla, located in Sonsonate
• 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 Angeles: 4:00 hours; Houston: 4:00 hours;
New York: 5:00 hours; Panama: 1:30 hours.
Puerto La Unión, located in La Unión
Investment Opportunities in Logistics:
• Logistics activity zones in the proximity of seaports.
• Airport logistics center
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• Distribution centers
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
37. El Salvador is an ideal destination for
companies wishing to do footwear
manufacturing operations at competitive
costs, and offers:
FTAs with flexible rules of origin and
preferential access conditions
Attractive tax incentives, and
A productive and young labor force
El Salvador's commitment is to develop a
vertically integrated production chain,
ranging from the manufacture of
components to the production of
finished footwear.
Logistics
Footwear
Easy and timely access to large markets.
A platform to export to large markets.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
38. El Salvador:
An ideal platform for assembly and export of footwear
• The FTAs signed by El Salvador provide flexible rules of origin to
facilitate the entry of this product in important markets:
Advantages:
• The Free Zones Law offers attractive tax incentives to this type of
manufacturing.
• Availability of a competitive, productive and committed
workforce.
• There is a developed industry with over 50 years of experience
and with the participation of foreign investors such as Nanyang
Footwear, that already has assembly operations in the country.
• The rule of origin issued by the United States allows the manufacturer
to incorporate prefabricated components in third countries and access
the market without tariffs. This rule of origin does not set a minimum
requirement of value added.
• The Association Agreement with the European Union gives free and
immediate access to this market for footwear products manufactured
in El Salvador. The rules of origin allow use of third-country raw
materials and parts, and export the final product duty free.
• The FTA with Mexico allows the aggregation principle to meet the
requirement of 50% of national value added.
Sector opportunities
•
Manufacturing and production of footwear.
•
Assembling components of footwear.
•
Manufacturing of components and supplies footwear industry.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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39. Services provided by PROESA
Business
opportunities
Information on investment opportunities in strategic industries, as well as of
the incentives and investment advantages of those industries.
Statistics and customized industry information.
Strategic
information
Information on set-up and operational costs, regulations, availability of human
capital, business climate and any other information required in the country
evaluation process.
Personalized attention to specific enquiries.
Advisory and
technical
assistance
Organization, logistics and coordination of tailored agendas for visits to El
Salvador. Specialized support before, during and after commercial and
recognition visits.
Assistance to potential investors in the generation of local business contacts.
Comprehensive support in procedures required to establish or expand
business operations in the country.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
40. EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Edificio D'Cora Primer Nivel, Urb. Santa Elena, Antiguo Cuscatlán, La Libertad, El Salvador, C.A.
www.proesa.gob.sv
+503 2241 6400
info@proesa.gob.sv
@Proesa_sv
PROESA El Salvador
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR