EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
El SalvadorA country of opportunities
January 2014
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
EL SALVADORAhuachapán
Santa Ana
Chalatenango
Sonsonate
SanVicent
e
Cabañas
La Paz
LaLiberta
d
SanSalvado
r
Usulután
San Miguel
Morazán
LaUnión
Cuscatlán
Gulf of Fonseca islands
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
El Salvador
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
• Solid economic environment
• International view of El Salvador
• Commercial openness & strategic location
• Investment Opportunities in El Salvador
El Salvador
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Central American Market
Country
EL SALVADOR GUATEMALA HONDURAS NICARAGUA COSTA RICA PANAMA
Central America
Capital San Salvador Guatemala City Tegucigalpa Managua San Jose Panama City
Official Language 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
Source: Multi –Purpose Household Survey, Central Reserve Banks, and IMF.
70% of the population and commerce concentrates in ES, GT, and HN.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Fringe benefits represent 20.67% of nominal wage
* Effective since January 2014** Provision in case of termination of contract*** Applies to companies with more than 10 employees
Source: Ministry of Labor El Salvador
Sector Monthly Minimum Wage* Daily Wage
Agriculture $ 113.70 $ 3.79
Maquila $ 202.80 $ 6.76
Industry $ 237.00 $ 7.90
Commerce & Services $ 242.40 $ 8.08
10%
20%
40%
60%
80%
100%
120%
140%
NominalWage100%
Fringe Benefits + Annual Severance Provision
29%
Social Se-curity (ISSS)
7.50%
Retirement Fund (AFP)6.75%
4.17%
Annual Severance Provision**
8.33%
Fringe benefits paid by the employer (20.67% of nominal wage)
Christmas Bonus
Vacations paid yearly 1.25%
Training Fund (INSAFORP)***
1.00%
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Costa Rica
Panama
El Salvador
Nicaragua
Honduras
Guatemala
0 5 10 15 20 25 30
29.6
28.0
25.1
23.7
21.6
20.7
M 23.7
F 26.6
EAP: 2,724,754
years
Young Population
Average Age(Estimates)
Source: Multi-Purpose Household Survey 2012, CIA World Factbook 6
0 - 4
5 - 9
10 - 14
15 - 19
20 - 24
25 - 29
30 - 34
35 - 39
40 - 44
45 - 49
50 - 54
55 - 59
60 - 64
65 - 69
>= 70
Female52.8%
0.0%5.0%10.0%15.0%
Male 47.2%
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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
International view of El Salvador
IndexEl 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
Rankings (2013-2014)• Global
Competitiveness• Procedures to start
a business• Infrastructure• Roads• Airports • Mobile Telephones• Taxes
97
887258563161
86
1297890713285
111
13511511497
10280
99
881057999
107132
54
12976
1255742
125
40
47374854
898
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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
Legal Framework
Investment Law
International Services Law
Tourism Law
Free Zones Law
• Equal treatment to national & international investors• Liberty to transfer funds and profits abroad• Access to local financing
• 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.
• 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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Construction Projects Procedure Streamlining Law
• Creation of a One-Stop-Office for the reception and processing of construction and land fragmentation project applications.
• Development of a centralized computer system to track applications.• Publication of updated information about requirements, administrative
procedures, criteria and environmental and cultural zoning.• Procedure streamlining (if a public authority does not resolve within the
established deadlines, it shall be understood that the resolution has been issued in favor of the applicant).
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Commercial Openness Access to a potential market of 1,200 million people
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Apparel37%
Agroindustry16%
Food and beverages
8%
Plastics and rubber
6%Paper products
5%Metal-mechanic industry
5%Machinery and mechanical
products5%
Chemical products
5%
Textiles4%
Mineral products
4%
Others5%
United States46%
Central America38%
Panama2%
Mexico2%
Dominican Republic
1%
Spain1%
Germany1%
Canada1%
Chile1%
Japan1%
Others5%
Main Trade Partners*
Main Export Products*
Source: Central Reserve Bank
Main Trade Partners and Export Products
El Salvador Exports 2012USD 6,659 millionGoods: USD 5,339 million
Services: USD 1,320 million
12*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
Main airlines serving El Salvador
Strategic Location
Main Freight Companies
Air Cargo• DHL• UPS• Arrow
Regular charter flights
Maritime• MAERSK• CROWLEY• MSC• SEABOARD
• NIPPON• CSAV• APL • Hamburg Süd
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.
(Montreal, Toronto)
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Strategic Location
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Strategic Location
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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
Foreign Direct InvestmentStock 2012 USD 8,634.9 million (36.2 % of GDP)
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Specialized Textiles Aeronautics Electronics
Medical Devices Offshore Business Services Health Services
Tourism Agro-industry Logistics and Infrastructure Footwear
Investment Opportunities
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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.
AeronauticsCompliance with international certifications ensuring the highest quality required in aircraft maintenance services.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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. 20
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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.
AgroindustryClimate, tax incentives and a platform connected
to additional markets.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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.
• The country has optimal interconnections for the trade and transport of agro industrial products.
• 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.
• Competitive labor costs.
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 such as: packaging, process technology, machinery and equipment. 22
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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 DevicesRapid access to markets
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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. 24
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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.
ElectronicsHigh productivity and quality manufacturing at competitive costs.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
El Salvador: A platform for electronic components manufacturing
• Setting of strategic alliances with academia to ensure availability of skilled workforce.
• E-cluster in formation around the AVX Kyocera Company in El Salvador.
• Wide local supply chain in place in the areas of metalworking, plastics, support systems, automation systems, engineering, transport and chemicals, among others.
• Existence of a Law on Free Zones offering tax incentives to this type of manufacturing.
• The best international airport in the region just 35 minutes from San Salvador, and 2.5 hours from Miami.
• 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. 26
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
For offshore business service firms seeking to enter markets in the U.S. and Spanish-
speaking countries, El Salvador is a strategic partner for providing quality multi-region
business services.
Our dynamic business environment, strategic location for near-shoring, time-
zone 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 cost-effective location for this industry.
Offshore Business ServicesCost 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
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).
• Same time zone for primary customers (U.S. and Canada) and Spanish-speaking markets (91% of the global Spanish-speaking population).
• Time-zone complementarity for customers in Europe and Asia (24/7 possibility).
• Friendly, hardworking and service-oriented people with neutral English and Spanish accents.
• Exceptional performance against key indicators (KPIs) such as Sales, C-Sat, FCR, etc.
• Complementary service to other geographical areas and high-end front-office services.
• Young and committed workforce (60% of the population under 35 years).
• Cultural affinity of the workforce with priority markets.
Investment Opportunities in Offshore Business Services:• Voice Business Process Outsourcing (Call Centers)
• Non-voice Business Processes Outsourcing (BPOs)
• Shared Service Centers (KPOs) 28
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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 ServicesGeographical 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
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. 30
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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, high-
turnover garment manufacturing industry.
Specialized Textiles and ApparelVertically integrated industry with easy access to markets
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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. 32
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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.
TourismSurf, fishing, adventure tourism and the
Maya world ... all in one place.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
El Salvador: Variety of close-by touristic attractions
• Tax incentives regulated by a Law on Tourism.
• Foreign investors have the opportunity of acquiring property in their own name.
• Competitively priced land and low construction costs.
• Rapid access to a variety of tourist attractions.
• Short flight times from North and South America.
• The International Airport of El Salvador handles more than 470 arrivals and departures every week.
• Pleasant climate all year round.
• 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
• Marinas 34
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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.
LogisticsEasy and timely access to large markets.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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.
• 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.
Investment Opportunities in Logistics:• Logistics activity zones in the proximity of seaports.
• Airport logistics center
• Distribution centers
Puerto de Acajutla, located in Sonsonate Puerto La Unión, located in La Unión
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
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.
LogisticsEasy and timely access to large markets.
FootwearA platform to export to large markets.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
El Salvador: An ideal platform for assembly and export of footwear
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Sector opportunities• Manufacturing and production of footwear.• Assembling components of footwear.• Manufacturing of components and supplies footwear industry.
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 FTAs signed by El Salvador provide flexible rules of origin to
facilitate the entry of this product in important markets:
• 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.
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
Information on investment opportunities in strategic industries, as well as of the incentives and investment advantages of those industries.
Statistics and customized industry information.
Business opportunities
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.
Advisory and technical assistance
Services provided by PROESA
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.
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EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOREdificio D'Cora Primer Nivel, Urb. Santa Elena, Antiguo Cuscatlán, La Libertad, El Salvador, C.A.
www.proesa.gob.sv
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@Proesa_sv
+503 2241 6400
PROESA El Salvador