WHY EL SALVADOR?
1. Monetary Stability
Since 2001, El Salvador adopted the U.S. dollar as legal tender- one of the most important policies implemented to open the country’s economy to world trade and investment.
2. Preferential Access to International Markets
El Salvador has a privileged geographical location. Located at the heart of the Americas, it is a true commercial bridge between North and South America. El Salvador is also part of the bi-oceanic corridor linking Europe to Asia.
The geographical location of El Salvador allows traveling by air to major cities in North and South America in just a few hours (2-5 hours flight), with direct flights to over 33 destinations, and besides the International Airport of El Salvador is the regional hub for the Avianca airline. Freight transport is also facilitated by the country’s proximity to major shipping routes
El Salvador has an incredible location for manufacturing companies that seek short response times to meet customer demands in North and South America. Likewise, the country’s modern port and airport infrastructure is determinant for companies to have efficient logistics operations.
In the area of international services (off shoring and outsourcing), the location of El Salvador is key, as it shares the same time zone as the central United States (CST), six hours behind the Greenwich Mean Time ( GMT). This is strategic for the country to provide offshore business services and commercial aircraft maintenance.
El Salvador has trade agreements with 43 countries in the Americas, Europe and Asia. Together they represent a potential market of 1.2 billion consumers. These agreements provide flexible rules of origin and major reductions in import tariffs.
3. Attractive Tax Incentives
El Salvador is committed to promoting investment and developing long-term relationships with investors. The country’s legal framework provides attractive tax incentives and gives equal treatment to local and foreign investors.
a) Investment Law
This law seeks to encourage private investment and, more specifically, Foreign Direct Investment (FDI).
b) Free Zones Law
Offers generous tax incentives to export oriented manufacturing companies located in Free Zones or Warehouses for Inward Processing (DPA, for its acronym in Spanish). Free Zones are industrial parks considered outside the national territory for fiscal purposes, and thus raw material or merchandise required by companies are imported free of taxes and tariffs. If a company – for technical reasons – is unable to operate inside a free zone, it can be authorized to operate outside as a Warehouse for Inward Processing (DPA) and enjoy all the benefits of this law.
c) International Services Law
Provides tax incentives to companies dedicated to providing services to foreign customers. To enjoy these benefits companies may establish in Service Parks and Service Centers.
d) Tourism Law
Tourism projects with a minimum investment of USD 25,000 are eligible to be declared of “national touristic interest” and had a lot of benefits.
e) Renewable Energy Incentives Law
This law promotes investment in hydraulic, geothermal, wind, solar and biomass, or other source that could be considered renewable energy to generate electricity.
f) Public Private Partnership Law
This law establishes a legal framework for the development of Public Private Partnership (PPP) projects regarding public infrastructure, public services or activities of national interest.
g) Law of Legal Stability for Investments
This law guarantees legal certainty to investors on taxes, customs and immigration issues through Legal Stability Contracts.
h) Investment Funds Law
Regulates and establishes the supervisory framework of the investment funds, its participation shares, administering societies and its operations, as other participants.
i) Electronic Signature Law
This law acknowledges a simple electronic signature and certified electronic signature to a handwritten signature. It also gives and recognizes the efficiency and legal value to the certified electronic signature, data messages and any other information in electronic format accompanied by a certified electronic signature.
j) Construction Projects Procedure Streamlining Law
This law aims to speed up the approval of permits and authorizations for construction and land fragmentation projects throughout the national territory, regardless of its nature.
k) Intellectual Property Regime
There are two laws in the country that protect the intellectual property rights: Law of Trademarks and other Distinctive Signs, and Law of Intellectual Property.
4. Competitive Infraestructure
The Global Competitiveness Report 2016-2017 of the World Economic Forum (WEF) places the country among the nations with the best infrastructure in the world and in the region.
In Latin America it occupies the sixth position and worldwide, position 69 of 138 countries. El Salvador stands out for the quality of its competitive roads, ports and airports.
The high connectivity of the country is complemented by the existence of modern and advanced telecommunication and electricity markets, which guarantee access to these services in a reliable, quality and competitive price.
a) Highway Networks
The country enjoys a modern and efficient road network that connects its main cities and offers a rapid and easy access to the rest of the region. Due to this, the WEF has ranked El Salvador as the country with the best road infrastructure in Central America.
El Salvador main highways:
• Panamerican Highway
• Litoral (Coastal) Highway
• Longitudinal del Norte (North Longitudinal) Highway
El Salvador International Airport (AIES) stands out as an important regional hub and top class maintenance center for commercial aircrafts. According to the WEF, El Salvador has one of the best airports in the Central American region.
El Salvador has a versatile port infrastructure able to respond to the needs of freight services in an effective manner.
5. Competitive Costs
El Salvador is the most cost-competitive country to set up and operate a business. Over the last years, the Financial Times’ investment journal fDi Intelligence has classified El Salvador as the most cost effective country in Central America.
The minimum wage per sector, are:
PER AGRICULTURE INDUSTRY COMMERCE AND SERVICES TEXTILE AND APPAREL MAQUILA
HOUR 0.834 1.25 1.25 1.23
DAY 6.67 10 10 9.84
MONTH 200.1 300 300 295.2
6. Labor Climate
El Salvador’s labor force is composed of 2.9 million people, 57% of whom are 39 years or younger. Thus, it offers a highly productive labor force capable of developing new skills in short time. The country’s labor force is ideally qualified for manufacturing, agro-industrial and service activities.
Furthermore, there is a growing population with higher education that can face the challenges of a modern and globalized economy. The Salvadoran labor force is world-famous for its industriousness, efficiency and work ethic.
Investors can satisfy their demand for technicians through a pool of institutes specialized in technical education, such as:
• MEGATEC (Gradual Learning Model of Technical and Technological Education), with locations in La Unión, Chalatenango, Ilobasco, Sonsonate and Zacatecoluca
• Escuela Superior Franciscana Especializada / AGAPE (Specialized Superior Franciscan School)
• Escuela Especializada en Ingeniería / ITCA-FEPADE (Specialized Engineering School), with regional centers in Santa Ana and San Miguel
• Universidad Don Bosco / UDB (Don Bosco University)
• Escuela Nacional de Agricultura / ENA (National School for Agriculture)
Among the technical careers available, are: Aeronautical Maintenance, Agroindustry with Specialization in Fruits, Vegetables and Grains, Agronomy, Aquaculture, Biomedical, Civil Engineering, Customs and Logistics, Dental Surgery, Electronics, Food Processing and Preparation, Gastronomy, Global Logistics, Industrial Engineering, Mechanical Engineering, Medicine, Nursing, Orthoses and Prostheses, Port Management and Operation, Software Development, Tourism and Tourism Development and Management, among others.
Companies that need to train their active workers can do so with the aid of the Salvadoran Institute for Professional Formation (INSAFORP, for its acronym in Spanish), an autonomous governmental agency that aims to satisfy the needs for qualified human resources required by the country’s private sector.
Multiple investors have found in INSAFORP an important tool for co-financing, partially or totally, their employees’ professional development.