Proesa-萨尔瓦多投资机会（英文版）-2019.4-27页_2mb

Summary of Investment Opportunities in El Salvador

Core Content

El Salvador is an export-oriented free-market economy located in the heart of the Americas, known for its macroeconomic stability, competitive infrastructure, and favorable investment environment. It has been recognized by the World Economic Forum as the easiest country to do business in Latin America and ranks 7th in macroeconomic stability. Additionally, El Salvador is ranked 1st in road connectivity in the region and 2nd in infrastructure among Central American countries.

Macroeconomic Stability

• El Salvador has maintained inflation rates below the Latin American average due to the adoption of the U.S. dollar as legal tender.
• It is noted as the country with the lowest inflation rate in Latin America.

Investment Incentives

• El Salvador offers tax exemptions for income, municipal taxes, and real estate transfers, along with import duty exemptions for businesses in free zones.
• There are 17 free zones in the country, which have attracted over 83,500 jobs and US$3,000 million in exports.
• The International Services Law provides incentives for strategic sectors such as contact centers, BPOs, and logistics, including total tax and import exemptions.

Strategic Sectors

• Agroindustry: Exports include raw cane sugar, refined sugar, aluminum scrap, iron/steel slag, and textiles.
• Tourism: Requires a minimum investment of USD 25,000 per project, with tax exemptions on income, municipal taxes, and import duties.
• Energy: The country promotes renewable energy with customs duty exemptions on machinery and equipment for 10 years, income tax exemptions for 5–10 years, and exemption on revenues from Certified Emission Reductions.
• Aeronautics and Light Manufacturing: These sectors benefit from favorable investment conditions and infrastructure support.

Labor Force

• El Salvador has a labor force of 3.0 million, with 56% under 40 years old.
• 21% of the graduates are in engineering and technology, and 23,000 new technicians and professionals join the labor force annually.
• The workforce is recognized for its industriousness, efficiency, and work ethic.

Infrastructure

• Ranked 2nd in infrastructure in Central America (after Costa Rica).
• The road connectivity index places El Salvador 1st in the region.
• The Customs Union between El Salvador, Guatemala, and Honduras integrates the subregion into a market of 32 million people, representing 73% of the Central American population.

Foreign Direct Investment (FDI)

• In 2018, FDI stock reached USD 9.7 billion, accounting for 37% of GDP.
• Manufacturing and Finance and Insurance are the main FDI sectors, with USD 2.7 billion and USD 3.2 billion respectively.
• FDI net inflows in 2018 were USD 1.1 billion.

Public-Private Partnerships (PPPs)

• El Salvador promotes PPPs to develop public infrastructure and services.
• Minimum investment for PPP projects is USD 13,687,650 million.
• Examples of investment projects include:
  • Air cargo terminal: USD 60 million (Private)
  • Lighting and video surveillance: USD 15 million (Private)
  • New Government Center: USD 120 million (Public-Private)
  • Airport economic zones: USD 15 million (Private)
  • Science & Technology Park: USD 26 million (Public-Private)

Relations with China

• El Salvador has initiated relations with the People's Republic of China, including:
  • The President's first official visit to China in 2018.
  • Participation in the China International Import Expo 2018.
  • Total trade with China reached USD 1.74 billion (2014–2018).
• Top 5 exports to China:
  1. Raw cane sugar
  2. Refined sugar
  3. Waste and scrap of aluminum
  4. Slag and other waste from iron or steel
  5. T-shirts (excluding cotton)
• Top 5 imports from China:
  1. Mobile phones
  2. Photosensitive semiconductor devices
  3. Computers
  4. Motorcycles
  5. PET

Legal Framework

• El Salvador has a legal framework that guarantees equal treatment for national and international investors.
• The Law of Legal Stability for Investments ensures legal certainty for up to 20 years on taxes, customs, and immigration issues for investments of USD1,283,597.4 or more.
• A bill is in Congress for the approval of the Special Economic Zone in the South Eastern Area of El Salvador Law, aimed at attracting foreign investment and integrating local firms into global value chains.

Investment Promotion

• PROESA is the strategic partner for investment, offering:
  • Information on business opportunities and incentives.
  • Strategic data on costs, regulations, human capital, and business climate.
  • Advisory and technical assistance for investment planning and execution.
• The free app "Invest in El Salvador" is available for smartphones and tablets to assist investors.

Conclusion

El Salvador presents a cost-competitive environment with favorable tax incentives, modern infrastructure, and a skilled labor force. It is a strategic location for foreign direct investment, especially in agroindustry, tourism, energy, and manufacturing. The Customs Union with Guatemala and Honduras enhances logistical efficiency and market access. With ongoing legal and economic reforms, El Salvador is increasingly becoming a preferred destination for international investors.