15 minutes | May 18, 2021

Invest in El Salvador: A conversation with the Minister of the Economy

A Conversation with the Minister of Economy, El Salvador Contact the Central American Group to discuss your investment in El Salvador.  The Central American Group: Hello, welcome to another installation of the Central American Group’s series of podcasts.  In these conversations that we have with experts that are internal and external to the organization, we discuss issues that have to do with El Salvador and the region as a whole. Today we have Maria Luisa Hayem with us. She leads the Ministry of Economy of El Salvador, which attends to the needs of companies that invest in El Salvador.   I’d like to let her introduce herself and give us a little bit of biographical information. Maria Luisa Hayem: Thank you. Good morning, and thanks for having me. Since June 1, 2019, I have been leading the Ministry of Economy of El Salvador.  This is after having spent more than 15 years working abroad on trade, investment, technology, and financial inclusion issues.  I am serving El Salvador to contribute with my academic background, professional experience, and passion to help transform the country and its economy, as well as assist those that seek to invest in El Salvador. The Central American Group: That’s great. Speaking about what’s going on in the country at the present moment, we all have been dealing with the COVID virus.   What is the situation in El Salvador with your progress in this area? Maria Luisa Hayem: So, it’s a very interesting moment here right now not only on the health front but also on the economic front. But let me start on health.  El Salvador has been recognized worldwide for its performance in managing the COVID-19 pandemic.  As of May 12, El Salvador was the country in Central America with the lowest number of confirmed COVID-19 cases in the midst of the pandemic. As you might know, the government of El Salvador has built one of the largest and most modern hospitals in the region.  It specializes in treating COVID-19. This has allowed the government to constantly take care of our population’s needs, including in the most difficult moments of the pandemic. International organizations such as the World Travel and Tourism Council has issued a certification that designates El Salvador as a safe destination for travel.  I’m also very honored to share with you that at the end of this month, again, in the midst of the pandemic, El Salvador will be hosting the International Surfing Association World Surfing Games 2021. El Salvador has made a lot of progress in its vaccination program.  This is according to the International Monetary Fund (IMF). Our vaccination program has now become a part of El Salvador’s economic policy. As such, the government of President Bukele has given it the priority that it deserves. Since last year, the Ministry of Health has been working to access vaccines to provide immunity to distribute to our population in a shorter term. As of May 5, El Salvador has already vaccinated 26% of its target population. With this, we’re currently the country with the largest vaccination coverage in Central America. Additionally, we are among the leading countries in Latin America. I’m also happy to share the information that the government has signed an agreement with Pfizer to provide the country with 4.4 million vaccines. With this, we will be able to cover the entire target population. In terms of our economy, we believe that pandemic management and the priority given to vaccination that I just shared demonstrates the resiliency of our companies and the trust that exists in our country as a whole. All of this has contributed to El Salvador’s fast recovery since June 2020, when we started implementing the plan to gradually reopen the economy and service people that seek to invest in El Salvador.  The plan was developed together with the country’s productive sectors. I’m also happy to share that, since August 2020, El Salvador’s economy has remained 100% open. While the whole world has been going through one of the largest economic and public health crises in the past several months, El Salvador has reached its highest level of international remittances. El Salvador is now back to its pre-crisis economic activity.  We have recovered 100% of jobs lost in 2020. This means that we have recovered more than 81,000 jobs in less than a year. We believe that if we continue with our work on the health side, while also facilitating trade and investment, and providing legal certainty to our local and international investors, this year, El Salvador’s economy will grow between 5% and 6%. The Central America Group: That’s a great overview. And it’s good to hear that El Salvador really managed the global pandemic very well and will have significant economic growth this year. With El Salvador being the smallest country in the region, what things would you recommend that people who are looking to invest in El Salvador pay attention to? Maria Luisa Hayem: El Salvador is strategically located in the center of Central America, with access to the Pacific Ocean.  It has two seaports and 17 Free Zones.  We have a conveniently located international airport that easily connects El Salvador to North and South America, and, of course, the European Union.  The airport is close to San Salvador is and less than a one-hour drive from four of the main free zones. Another feature that differentiates El Salvador from other countries and creates opportunities for potential investors is the fact that we have signed 13 free trade agreements.  These offer companies that locate and invest in El Salvador preferential access to 42 countries around the world.  These include the United States and the European Union. The Central American Group: What business sectors are strategically most prevalent in El Salvador? Maria Luisa Hayem:  We are working in different areas to promote investment in general. There are some sectors that are strong and already very well established in El Salvador. We call them our traditional sectors.  These include packaging and paper, plastic products, food and beverages, and textiles.  These already very well-established and integrated sectors still have room to grow for those looking to invest in El Salvador. Also, we have identified sectors with large growth potential.  These include medical equipment, aeronautical services, logistics centers, technology, services, and tourism. I would like to highlight that El Salvador has one of the strongest and most integrated textile and apparel sectors in the region.  It offers full package activities, from the production of yarn to the delivery of finished products. The Central American Group: We know that El Salvador, because of the Central American Group’s experience, has a strong free zone program.  Could you explain what the benefits of having a facility in one of these special zones are? Maria Luisa Hayem: Yes. El Salvador offers various advantages for investors. Some are related to tax exemptions.  One of the main differences in El Salvador’s tax regime is that the income tax and municipal tax exemptions are given to all companies established in free -zones.  Tax exemption timeframes are for between 10 and 20 years.  Investors may request additional extensions based on future investments. Likewise, El Salvador offers non-tax-related incentives which we consider equally important and attractive for companies that are planning to invest in the country.  Specifically, these include workforce development incentives and agile permit delivery, among others. We have worked to reduce response times to companies by simplifying and digitizing our processes. Actually, we are committed to creating the best business climate in Latin America. We know this is a high goal. But really, we believe that the higher the goal, the more results that we will achieve. The Central American Group: You mentioned 17 free zones in Salvador. How do investors go about making a choice with which one to operate? Obviously, we hope that investors consider the ones owned and operated by the Central American Group. However, if they want to look at other opportunities, how do they make the choice? Maria Luisa Hayem:  This depends on the investor’s individual needs. Some of the free zones are strategically located close to the airport.  In these developments, companies can benefit from nearby shipping facilities and low transportation costs. Other free zones are established in the city or rural areas that benefit from the proximity to the workforce that lives nearby.  We’re ready to learn more about the needs of the companies and provide them with all the necessary information so that they can choose the right location. The Central American Group:  Once they’ve chosen a location, how long does it take to establish a business and open its doors? Maria Luisa Hayem:  Again, we have a strong commitment to facilitating investment and trade. We know that time key consideration for every business operation. It now takes six days to register a new local company, or 11 days to register a foreign branch. Furthermore, we’re working so that all these processes can be done through our online platform, we have implemented www.miempresa.gob.sv. Once the company chooses a location at which to establish itself within a free zone, it takes approximately one month for the Ministry of Economy to approve fiscal benefits and exemptions so that they can begin operations. The Central American Group: When a company is already up and established, to update any permitting for the purpose of bringing in things like new machinery, materials, arcs that they use in their processes, is there any further thing that has to be done? Maria Luisa Hayem: Yes.  Because of this, we’re working so that companies can access all government services through our online platform: www.miempresa.gob.sv.  This benefits investors because we no longer have to ask them to redundantly provide documentation that we already have in our files. This also shortens our response times and allows companies to better serve their customers. We believe this is a win-win situation for everyone. We are currently working in order to make this platform more robust so that companies can execute all the processes that they need online The Central American Group: We generally receive questions after we do the recordings with individuals like yourself from people that that want more detail on certain issues. Do you have a website? Or do you have an email that people write to and ask questions? Maria Luisa Hayem: Yes, we have a website that we’re happy to share with you and the contact point of our director for investment in the Ministry of Economy. We’re happy to respond to any questions that investors might have, and also to be the link between the investors and other government institutions? The Central American Group: We’ll include this information in the transcript that is below the podcast and the page that we’re going to post for the session. We want to thank you for joining us today.  We wish you all the best of luck and look forward to seeing our El Salvador develop as a country. Maria Luisa Hayem: Thank you very much.  We’re confident that we have identified all the constraints that may affect those that wish to invest in El Salvador.  Also, we have identified all the opportunities that have come up even in the context of the pandemic.  We’re working as a government and as a team in order to provide everything that companies need to establish themselves, to operate, and to grow.  We’re happy to have this opportunity to speak with you and are looking forward to other similar opportunities in the future. Thank you very much and have a great day. Contact UsPlease use this form to contact us and we will respond as soon as possible: hbspt.forms.create({ portalId: "4942516", formId: "4e06c058-8555-403f-a026-77268123ee9f" }); The post Invest in El Salvador: A conversation with the Minister of the Economy appeared first on The Central American Group.
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