El S l a d va or d A A coun c tr oun y of opportunities March 2009

Transcription

1 El Sl Salvador A country of opportunities March 2009

2 El Salvador Capital Official Language Area Population San Salvador Spanish 21,040 Km2 / 8,124 sq mi 5,744,113 (2007 census) GDP Billion USD (2008) HDI (2005) Currency $ USD Time Zone UTC 6 2

3 El Salvador Capital Official Language Area Population San Salvador Spanish 21,040 Km2 / 8,124 sq mi 5,744,113 (2007 census) GDP Billion USD (2008) HDI (2005) Currency $ USD Time Zone UTC 6 3

4 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & location FDI in El Salvador Infrastructure 4

5 Political Stability present government ( May 31, 2009) Political Stability Two decades of free elections building a shared country vision 4 presidential elections won by Alianza Republicana Nacionalista (ARENA) Solid Democracy Consolidation of a democratic system Balance of power in Congress Government Legitimacy High voter turnout 5

6 Political Stability 80% 75% 70% 65% 68,3% PCN PDC 11 CD 5 1 FMLN 60% 53,8% 55% 52,0% 57,7% 51,3% 35 50% 45% 40% 35% ARENA 32 30% Congressional election results, February 2009, seats won by party % presidential 39% 67% 61% voter turnout (1999) (2004) (2009) Presidential: % of votes for Presidential Candidate (for 1994 result on 2 nd round) Source: Tribunal Supremo Electoral El Salvador. Turnout = Total votes cast / Registered voters 6

7 Stable Economic Growth $25 B GDP (constant 2007 US$) 10% $20 B Real GDP growth 8% Country (2007) GDP (current US$ Billions) GDP growth (annual %) GDP per capita (current US$) $15 B $10 B $5 B $0 B 6% 4% 2% 0% Mexico % 8,478.7 Brazil 1, % 6,937.9 El Salvador % 3,546.8 China 3, % 2,460.8 India 1, % Source: IMF saw the highest Real GDP growth in the last ten years Source: International Monetary Fund, Central Bank of El Salvador (Banco Central de Reserva, BCR) 7

8 Dollarized Economy Moody s investment grade Local Currency per USD % change vs 12 months before 60% 50% 40% 30% 20% 10% 0% 10% 20% 30% Mexico MXN El Salvador USD India INR China CNY Brazil BRL Source: IMF, Central Banks 8

9 Low Inflation 30% CPI % Change El Salvador CPI % Change % India 20% China 15% Mexico 10% El Sl Salvador 5% Brazil 0% % 2% 4% 6% 8% 10% Source: International Monetary Fund 9

10 Young Population Male 47.1% >= Female 52.9% Median Age (2008 est.) El Sl Salvador 22,22 yrs India Mexico 25,1 26, Brazil 29,0 China 33,6 M 21.1 F % 6% 5% 4% 3% 2% 1% 1% 2% 3% 4% 5% 6% 7% Source: Encuesta de Hogares de Propósitos Múltiples (2006), Dirección General de Estadísticas y Censos (DIGESTYC) CIA World Factbook

11 Education Higher Education Institutions Higher Education Graduates 2006: 13, Universities 8 Technological Institutes 5 Specialized Institutes More than 10 Specialized Language Training Centers Technical Degree 9,9% Bachelors Degree 87,2% Masters Degree 2,9% Souce: Ministry of Education 11

12 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & location FDI in El Salvador Infrastructure 12

13 Among top free economies 33 of 179 Index of Economic Freedom Economic Freedoms 80% 75% Gov't Fiscal 88% 86% 70% El Salvador Trade 82% 65% Panama Mexico Monetary Investment 77% 70% 60% Financial 70% 55% 50% Brazil India China Labor Business Property Rights 67% 67% 50% El Salvador World 45% Corruption 40% % 20% 40% 60% 80% 100% Index of Economic Freedom: The index scores nations on 10 broad factors of economic freedom using statistics from organizations like the World Bank, the IMF and the Economist Intelligence Unit. Source: The Heritage Foundation. Index of Economic Freedom. 13

14 Investment Grade JP Morgan Emerging Market Bond Index Plus(EMBI+) spread over US Treasury Bills El Salvador Latin America basis points Dec-02 Mar-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 El Salvador s sovereign debt trades at lower premiums as result of economic structural strength Source: JP Morgan Emerging Market Bond Index Plus(EMBI+) 14

15 Good Governance Index Score (min = 0, max =10) 5 Transparency International Corruption Perceptions Index Rank of 179 countries El Salvador Brazil China India Mexico Source: Corruption Perceptions Index calculated by Transparency International 15

16 Human Development Index Improvement HDI Trend HDI 2004 Composition 80% Mexico Brazil China India GDP Index Education Index Life Expectancy Index El Salvador El Salvador 70% China India 60% Brazil 50% Mexico % 20% 40% 60% 80% 100% Source: UNDP Human Development Index Report 2006 (based on data calculated on 2004) 16

17 Millennium Challenge Corporation (MCC) US government fund / grant to median income developing nations Five year project totaling USD $ million Funds Allocation Responsability and Accountability; $24,3 Project s Administration, $20.6 Countries are evaluated on 17 different indicators which fall into 3 categories Ruling justly Investing in people Economic freedom Connectivity "Longitudinal Northern Highway $233.6 Human Development $95.1 Productive Development $

18 Millennium Challenge Corporation (MCC) 18

19 Low political risk -The Economist Intelligence Unit Source: 19

20 Free country - Freedom House Free Partly Free Not Free Source: Freedom House 20

21 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & location FDI in El Salvador Infrastructure 21

22 Commercial Openness p Canada European Union Taiwan Central America & Dominican Republic USA Mexico Colombia Chile Access to markets totalling 540 million people FTA GSP FTA in Negotiation 22

23 Legal Framework Equal treatment to national & international Investors Investment Law Liberty for transferring funds and profits abroad Local international banking system International Services Law Incentives to strategic sectors (Contact centers, BPO, logistics, medical services, naval, etc.) Total permanent taxes exemption (VAT, income and municipal tax) and import duties Free Zones Law Incentives to industrial activities Taxes exemption (VAT, income and municipal tax) and import duties (WTO, 2015?) Tourism Law Requires minimum investment $ 50,000 USD Corporate tax exemption (income & municipal) No tax on imports goods 23

24 Good Strategic Location Main airlines serving El Salvador TACA American Airlines 5hrs Continental Airlines 2hrs Delta Airlines Copa Airlines Mexicana Regular charter flights Air Transat (Montreal, Toronto Pearson) Czech Airlines (Prague) Livingston Energy Flight (Milan Malpensa) 24

25 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & Strategic Location FDI in El Salvador Infrastructure 25

26 Record FDI in 2007 $1,526 USD Millions $1.600 $1.400 $1.200 $ % $800 $600 $400 $200 $0 Accumulated FDI (USD Millions) 1,800 1,973 2, ,134* 3,275 3,656 4,167 4,385 5,911 Major financial conglomerates acquired important Salvadoran institutions in 2007 Source: Central Bank of El Salvador * Since 2002 FDI flow includes inter firm loans. 26

27 Agroindustry Advantages Dry tropical weather Sugar cane excess production CAFTA agreement Competitive cost labor Proximity with USmarket Excellent road infrastructure Incentives International Services Law Permanent exemption of Income Tax and VAT Applies for Logistics & Distribution Centers Free Zones Law Provides incentives for manufacturing industry Opportunities Aquaculture Sugar cane products Ornamental plants Perishables distribution center 27

28 Textile and Apparel Strategy: Horizontal lintegration ti of sector through h formation of clusters in niche markets (sweaters, sports clothing) for high added value brands Product design Threads and Fabrics Cut & Sew Package and synthetic manufacture services distribution fiber Prior to 2004 Imapopa Ion Finishing Partex Sublimation 28

29 Contact Center & BPO Advantages Time Zone Location Strong Telecommunications Infrastructure Spanish/English neutral speaking accent International Services Law (ISL) Young labor force with competitive cost Opportunities Hispanic Market USA Spain Latin American Business Process Outsource ServicePark Developments (ISL) 29

30 Tourism Advantages Excellent airport infrastructure TACA s hub leading Latin American airline Diverse touristic attractions within short distances Excellent roads Strong customer services sector Tourism Law Opportunities Resorts development Hotel & spa Golf, marinas El Salvador is among 25 new Boutique hotels best adventure trips Adventure tourism Source: National Geographic; Medical tourism Nov

31 Electronics and Light Manufacturing Advantages Free Zones Law Competitive labor cost DR CAFTA Logistics Opportunities Aeronautics Maintenance Aircraft parts Logistics & distribution Autoparts AEROMAN is founder of the Airbus MRO Network #1 MRO worldwide in customer satisfaction; customers include jetblue, America West, US Airways, Frontier, TACA, among others 31

32 El Salvador Solid political & economic environment International view of El Salvador Commercial openness & location FDI in El Salvador Infrastructure 32

33 Infrastructure highways Description: Six lane highway circumventing the capital city Will satisfy demand until 2030 Constructed in four phases (40.12 km.) With 37 overpasses, 2 viaduct & 8 foot bridges Investment: $ MM Including complementary works: $773.60MM PPP Status: Feasibility study and final design of the entire project already finished With funds from the IDB 33

34 Infrastructure energy El Cimarron Hydroelectric Dam 261 MW El Chaparral Hydroelectric Dam 66 MW El Jobo La Angostura Hydroelectric Dam 72 MW Piedra de Toro Hydroelectric Dam 66 MW Talnique s Electric Generating Plant 50 MW Cutuco Energy of Central America LNG Terminal & cogeneration plant 525 MW / $500 MM AES Fonseca Energy, coal generation plant 500 MW / $700 MM 34

35 Infrastructure ports Port La Union Construction: May 2005 Feb 2009 TOA JDN, JV Investment: US $ 200 Million Area: 117 hectares Ha: port infrastructure Ha: industrial and commercial use Depth : 15 meters for POST PANAMAX ships Capacity Phase I: 550,000 TEU Phase II: 700,000 TEU Phase III: 700,000 TEU Current state: Concession thru PPP s ( 90 /10%) World class operators: DP World, HPH, ITCSI, SSA Marine, APM Terminals, etc. Congressionaldecree to beapprovedsoon 35

36 Infrastructure Port La Union 36

37 Infrastructure Port of Acajutla Currently the only port operating in El Salvador Throughput Constant growth of 20% past five years 4.8 million tones in ,000 TEU 70% bulk, 30% containers Ha for development Total pier: 1.3 Km divided in 3 sections of 8 to 12 meters draught Current state: Concession of the Port of Acajutla and Port La Union to a world class operators: DP World, HPH, SSA Marine, ITCSI, APM Terminals, etc. 37

38 Infrastructure airport El Salvador International Airport Strategic location away from the city and at sea level 100% year round visibility Optimal take off payload Certified A1 by Autoridad de Aviación Civil (AAC equivalent of FAA) Master Plan recently presented by French firm ADPi for the expansion and modernizing of the airport in 3 phases: Phase I : 4 million passengers Phase II: 7 m. Phase II: 12 M. 38

39 Infrastructure Master Plan by ADPi 39

40 Connectivity in El Salvador 40

41 Pacific & Atlantic access

42 Worldwide operation logistics from El Salvador 42

43 EL SALVADOR S INVESTMENT PROMOTION AGENCY Marco Arroyo marroyo@proesa.com.sv TEL FAX Edificio D'Cora Primer Nivel, Urb. Santa Elena, Antiguo Cuscatlán, La Libertad, El Salvador, C.A. 43

44 Foreign Direct Investment 44

45 Fringe benefits represent 27.61% of minimum wage 140% 2,78% 1,25% 1,00% 6,75% 120% 7,50% 8,33% 100% Total Fringe Benefits Fringe Benefit 80% Minimum Wage 27,61% 60% 40% 20% Sector**** Minimum Wage Daily Wage Agriculture $ 97.2 $ 3.24 Maquila $ $ 5.79 Industry $ $ 6.77 Commerce & Services $ $ ,00% 100,00% 0% Monthly minimum wage Severance pay* Social security (ISSS) Retirement fund (AFP) Year end bonus** Annual paid vacations** INSAFORP (training)*** Total *Provision in case of termination of contract ** Paid yearly, value shown is equivalent of monthly provision in order to meet yearly legal amount *** For companies with more than 10 employees only **** Effective since January

46 Central America Country El Salvador Guatemala Honduras Nicaragua CostaRica Panama Central America Capital San Salvador Guatemala City Tegucigalpa Managua San José Panama City Officiali Language Spanish Spanish Spanish Spanish Spanish Spanish Area ( 000 Km2) Population ( 000,000) GDP nominal 2007 (Bn) $20.4 $33.7 $12.3 $5.7 $26.2 $19.7 $118.0 per capita (USD 000) $3.5 $2.5 $1.6 $0.9 $5.9 $5.9 $2.9 GDP PPP 2007 (Bn) $41.7 $62.5 $30.7 $15.8 $45.8 $34.5 $230.9 per capita (USD 000) $7.3 $4.9 $4.1 $2.6 $10.3 $10.3 $5.7 HDI Dollar Quetzal Lempira Cordoba Colon Dollar Currency USD GTQ HNL NIO SJC USD Time Zone UTC 6 UTC 6 UTC 6 UTC 6 UTC 6 UTC 5 CAFTA Source: International Monetary Fund, Central Bank of El Salvador (Banco Central de Reserva, BCR) 46