Arin Sime
CEO and Founder
AgilityFeat
arin@agilityfeat.com

LATAM FDI: Welcome to another episode of LATAM FDI’s series of podcasts dealing with issues that have to do with foreign direct investment in Latin America. We are fortunate to have a lot of expert speakers join us in these sessions, and today is no exception. Today we have, and I hope I get the pronunciation of your name right, Arin Sime. Arin is the CEO of AgilityFeat, a company that specializes in accessing nearshore tech talent. I’ll let you introduce yourself, Aaron. Could you tell us a little bit about your biography, and then a little bit about your company, if you would?

Arin Sime: Sure, I’d be happy to. So, you’ve nailed the pronunciation perfectly. I’m Arin Sime. I’m the CEO and founder of AgilityFeat. We are a software development and nearshore staffing firm in Latin America, serving clients globally, with a primary focus on the US and beyond. I’m from the US, but live in Panama City, Panama. I started this company in 2010. My background is in software development, and I have worked as an engineering leader, as well as an agile coach and trainer, helping companies implement software process methodologies, such as AgilityFeat.  I began working with a business partner in Costa Rica, initially building technical teams for our clients in the United States. And eventually, I started working more, lived in Costa Rica for a little while, but then began working more broadly across Latin America. Eventually, I became a resident of Panama. My wife and I live here.  We have an office in Panama City, Panama. We also have an office in Bogotá, Colombia. But we’re a US company. And so, we started as a software development agency and then began providing nearshore staff augmentation, helping US companies access nearshore tech talent in Latin America. Over the past 15 years, we’ve developed a substantial amount of expertise that extends beyond software development.

Today, we can also conduct technical recruiting, access nearshore tech talent, and provide staffing services beyond software development teams. This year, we have also launched a new model called our Build, Operate, and Transfer Model, which aims to help our clients leverage our 15 years of experience in Latin America, including setting up subsidiaries and handling hiring and recruiting ourselves. Our clients can now leverage this from us to help them set up their own centers of excellence and delivery centers in Latin America. Because the first time you do that as a US company and you want to do some cost arbitration, build up larger technical teams in Latin America, it’s a little intimidating how to do that the first time. This is especially true if you’re setting up a wholly-owned subsidiary. But there are a lot of benefits to that. And we’ve learned how to go through some of those hurdles ourselves. As a result of that, we can now share that expertise with our clients.

LATAM FDI: Why would companies consider nearshoring for software development in the first place?

Arin Sime: I’m sure your listeners know that nearshoring involves working with anyone in your same time zone, or in nearby time zones. In the software development industry, outsourcing has been a thing throughout my career. I can remember working in companies as a software engineer 25 to 30 years ago. We worked with talent around the world, sometimes from our office in the US and at other times remotely. But when you work with someone on the other side of the world, there’s certainly great technical talent available, but it’s tough to work across that many different time zones, right? So, geographic proximity is the first and most important reason that people consider nearshoring, whether that’s for software development, BPOS, or contact centers, really, any technical staffing. Geographic proximity is essential so that we can work together in the same or similar time zones and collaborate effectively. In software development, it’s a highly creative process that requires a lot of collaboration and communication to succeed. It’s nice to be able to speak with people throughout your workday. The other significant benefit, of course, is the ease of travel due to geographic proximity.

So, like I said, I’m from the US, but I spend most of my time in Latin America. I love traveling around Latin America. And the fact that Panama and Colombia, where we do most of our work, are so easy to travel to from the US. It’s a significant benefit not only for us, but also for our clients, as they can visit their team members or have team members see them in the US. Therefore, geographic proximity is the primary reason to consider accessing nearshore tech talent. But beyond that, the essential complements to that are the availability of talent and the cost of talent. In many industries, finding skilled technical talent with strong English communication skills is challenging in the US, and it is at least costly. The amount of available talent in places like Colombia is significant for our clients, and the fact that our clients can do cost arbitration across different countries. Even if they are working in further time zones, complementing those more distant remote teams with teams in their time zones in Latin America is a significant boost and a good way to balance costs across the company while still maintaining strong communication.

LATAM FDI: So, you touched upon this, but could you expand upon it a little bit further? To a greater extent, why did you choose Panama and Colombia, particularly when you have the entirety of Latin America to choose from?

Arin Sime:  As I mentioned, I’ve lived in Costa Rica in the past as well. Costa Rica is another excellent location for accessing nearshore tech talent. I enjoyed living there. However, I went to Panama next, and we set up an office in 2019. One of the reasons I chose Panama was its reputation for being business-friendly. I don’t mean this as a knock on Costa Rica, but their primary aspects of their economy are tourism-related. In Panama, you’ve got the Canal, you’ve got banking. So, you have a much more diverse economy. However, you still retain many of the same benefits, including easy travel, geographic proximity, strong English skills, a close relationship with the US, and a business culture affinity, which is also essential. So that’s helpful. Panama has a visa program that was beneficial to people like me, allowing us to establish a business and obtain residency through it. Panama is very friendly for that as well.

Additionally, Panama boasts a robust tech community. We then expanded into Colombia as well, because it has an even larger community for accessing nearshore tech talent. It’s a much larger country than Panama, but it still has easy travel, a business-friendly environment, and strong English skills.

However, Colombia boasts a vast tech pool and a large community. You have certainly Bogotá and Medellín, but other emerging cities in Colombia are quickly becoming good tech hubs themselves, such as Cali and Barranquilla. I think they’re a good combination of everything that I like about working in Central America. Colombia, being in South America, is also closer to the United States, making travel easier. It’s easier for me, being from Virginia in the US, for example. It’s easier for me to fly to Panama than to California. That’s a significant advantage for our clients and me.

LATAM FDI: You mentioned Panama and Colombia in particular, but what’s the tech community in Latin America as a whole like?

It’s dynamic and exciting. A lot is going on. Latin America has had its unicorns, including some prominent tech startups. That is an excellent indicator of the strength of the tech community in Latin America. In Colombia, there is Rappi, a delivery service that is a significant employer in the country. It is an exciting startup. Argentina, for example, has Mercado Libre, which is a combination of eBay and Amazon for your US listeners, offering various services tailored to Latin America. These are some substantial tech companies that were founded in Latin America, primarily for the Latin American market, but they demonstrate the economic strength of the region. Additionally, you have AI centers. Of course, AI and software development are accessing nearshore tech talent. We talk about large language models, which is what AI, in a lot of ways, that we use that term, are made up of. This application development is significant in the software development community; it’s also vital in the business community as a whole because these applications are being used to build smarter, more AI-enhanced applications. Latin America is also becoming a hub for that type of work.

Chile, for example, is implementing data centers for that type of work, so that you have, because they’re very data-intensive and energy-intensive. There are places in Latin America that are looking to build data centers in an environmentally friendly way and distribute the workload of an AI application more globally. Additionally, other communities, such as those in Barranquilla in Colombia, have their own AI centers of excellence and are training their workforce to build and work with these types of applications. The tech community in Latin America is robust. I think if you name almost any major US tech company, they probably have an office in Colombia. Companies like AWS, IBM, Microsoft, Google, Accenture, Meta, and Facebook. They all have offices in cities like Bogotá and Medellín. That’s great for others who are looking at these areas, as it shows that there’s already strong technical talent there. And if accessing nearshoring talent in Colombia is good enough for Google, it’s probably good enough for your tech company as well.

LATAM FDI: Overall, we can say that over the last two decades, one decade, I don’t know, maybe you can clarify this for me, there’s been a trend towards Latin America developing pockets of technological excellence. Did things like the pandemic and the remote work culture that it spawned have any effect on accelerating things?

Arin Sime: Yes. There’s no doubt about it. When I started my career in tech 30 years ago, at the US company I was working with, we often brought people from other countries into the US and co-located them with us. While that remains common now, the remote work approach aimed at accessing nearshore tech talent has become a crucial aspect of the tech community and the tech economy since then. With the growth of fiber Internet connections in Latin America and high internet data connectivity rates, the region has undoubtedly opened up to remote work opportunities. As I mentioned, when I started AgilityFeat 15 years ago in 2010, we were first working with clients in the US. During those conversations, we had to convince them of several key points. We had to convince them that remote work was acceptable, as effective and efficient work could still be done with people who were not located in the office with you. We had to convince them that tech skills existed and that those skills were available in Latin America. We also had to explain terms like nearshoring to them.

What the pandemic changed, and we had to do that for years, the pandemic, because such a horrible event, of course, one of the benefits of it was that enforcing companies to allow more hybrid workforces and allowing people to work from home, it opened up a lot of companies to the possibility that you don’t have to have everyone in the office to do good work. That accelerated the trend of remote work in the US and globally. However, that also opened up companies’ minds to the idea that I could base part of my team in Latin America by accessing nearshore tech talent, and we could still work together as if we were down the street from each other, rather than on a separate continent. So that accelerated that. And even though, after the pandemic subsided, many companies have reverted to office-type initiatives. It is still very common for teams to work remotely. Even if they want those teams to work in an office in Latin America rather than from their homes, they’re still more open to the idea that that work can be done remotely. I think that has accelerated the trend in Latin America and made it a viable option for many people in Latin America to work in their home country, but how did you find the opportunity to work on really interesting work for major companies around the world?

LATAM FDI: From the discussion that we’ve had thus far, it’s clear that you have had some pretty expansive experience accessing nearshore tech talent in Latin America. However, over time, since you’ve been involved in this, can you identify any pitfalls with traditional outsourcing that exist for tech teams?

Arin Sime: Yeah, absolutely. Traditional outsourcing for tech teams, regardless of whether you’re doing it in the same time zones or not, whether it’s near shore in Latin America, if you’re a US or Canadian company, or if you are working with teams in a further away time zone, there’s still several pitfalls that people run into with this. One is that it can be harder to access nearshore tech talent in highly regulated industries. So, suppose you’re working in finance, fintech, health care, industries like that, where you have a lot of extra compliance that you need to be concerned about. In that case, data security, privacy, and regulations surrounding these issues can be more challenging in a traditional outsourcing arrangement because you don’t necessarily know where the personnel are located. You don’t necessarily know where they’re working from or what devices they’re working on. They might be in a cafe, or they might be in that company’s office, but it’s probably not a device or on a network that you control. That can be particularly challenging in highly regulated industries. Likewise, suppose you’re doing outsourcing in a way where you have contractors spread across many countries accessing nearshore tech talent, as many companies do. In that case, you have to worry about things like labor compliance in multiple countries.

And so if you have five programmers in five countries, that’s five sets of laws you need to be worried about. That’s hard to deal with. And then, of course, outsourcing can also lead to vendor lock-in. If you’re working with a company that is providing a large portion of your tech staff, it’s hard to change that relationship with them because you’re dependent on the people that they’ve provided to you. Also, when they’re working in another country, you may be worried about IP protection, your intellectual property. How do you ensure that’s protected when people are working elsewhere? Those are all challenges beyond how we communicate with everybody, and how we hopefully see each other in person occasionally to build on those relationships.

LATAM FDI: In a general sense, can you tell us what the pros and cons of establishing a tech presence in Latin America are for your company or for any company to engage in accessing nearshore tech talent?

Arin Sime: Yeah. So, a lot of those pitfalls that you could run into that I just mentioned can happen when you’re doing a more traditional outsourcing agreement or staff augmentation agreement. In our case, we’re a US company, and so our clients don’t have to worry about that quite as much. But they may still want to have, if they’re in one of those more heavily regulated industries, they may want to have that extra control over the devices people are working on, where they’re working, the policies that they follow, the networks they work on, all those things, whether they’re a team of software developers or a contact center for a health care institution, any of those scenarios, this applies. A significant benefit to organizations is establishing their physical presence in Latin America, which involves setting up a subsidiary that they own and control. This allows for complete control over implementing all necessary measures for accessing nearshore tech talent. You can ensure that everybody works in the office on a highly secure network, or you can allow them to work from home or in a hybrid environment under specific conditions. You can make sure that they’re working on your company devices.

So that is good. In addition, you’re getting additional lower costs. If you work through us as a staff augmentation for it, then, of course, we have our margin on top of what we pay our team members. And if you control that subsidiary yourself, then that opens up the possibility of you having lower costs as well. Those are some of the advantages of setting up your own tech subsidiary. And that’s why we can help some of our clients move from a staff augmentation model to owning their own operations in Latin America. However, there are some drawbacks to doing that as well. It’s hard to set up a new legal operation in another country when you’ve never done that before. You’re unfamiliar with the local business customs. You are unfamiliar with the regulatory environment. You are not familiar with the vacation policies or the compensation for full-time employees. How are bonuses handled? How are sick leave, maternity leave, and paternity leave handled? All of these factors vary from country to country. Often, I have found that in Latin-American countries, these policies tend to be closer to each other than they are to the way, say, US employment law works.

And so that can be a pretty big learning curve if you haven’t done that before. So that’s a disadvantage of setting us up. Essentially, that’s where we provide value to our clients: we’ve already learned those things. We have local legal and accounting teams in these countries that can assist with that and manage it on your behalf. People whom we trust are with us. And so, that reduces a lot of the difficulty around establishing and learning to run these operations, while still providing the other benefits I mentioned, such as lower costs and higher control over your operations.

LATAM FDI: When companies first come to you looking for advice, what do they typically want to know about setting up shop in Latin America?

Arin Sime: Yeah. They want to know about costs. They want to have a sense of the cost savings that they might achieve when accessing nearshore tech talent. And that varies a lot with the type of operation that they’re doing, the country that they’re looking at, even within that country, the city or region within that country. Colombia has multiple great cities, distinct tech regions, and varying costs associated with them. Working with a local partner offers a significant benefit in understanding the differences between those regions, not only in costs, but also in aspects such as the quality and type of talent available in each area. One city may have more education around AI-driven applications. Another city may be more suitable for, say, a contact center, a BPO process, and so on. Then, some of the things I hinted at in the last question, regarding benefits and the complexity of labor laws, or at least the differences in labor laws between those regions in the US. They want to make sure that they understand that, so that they know what the rules are around hiring people, what the rules are when you have to let people go, voluntary or involuntary.

There tend to be more vacation days and more holidays in Latin America. How is that handled? And how do you understand those sorts of differences? A lot of that, we know ourselves. Additionally, for more detailed conversations, we have tax and legal partners in each of these countries that we can also bring into the conversation.

LATAM FDI: Well, looking at further growth down the line, how can Latin America continue to attract foreign direct investment? And how can they continue to grow upon the base of the tech labor force that they already have?

Arin Sime: I think a lot of countries and regions in Latin America are doing a fantastic job of this. I’m from the US. I love working in Latin America. My team, my leadership team, is primarily from Latin America. However, as someone who is not from Latin America myself, I want to be humble in suggesting how others should run their countries or attract foreign direct investment. However, I believe there are many great examples available. Colombia has invested significantly in workforce education and technical universities. We try to capitalize on this by partnering with local universities in Panama and Colombia to attract younger talent. Additionally, we hope that they benefit from seeing a perspective from the industry about what skills we and our clients value most—so having a close relationship between private sector, both internal within these countries, as well as foreign companies and companies like ourselves, that bridge that gap between a US company and, say, a Colombian entity. Having close relationships with those sorts of companies, I think, can give a lot of insight into specific details of workforce education that they can invest in.

Continuing is important. Establishing public-private partnerships for events is crucial. I think it’s great. There are numerous significant tech events in Colombia, for example. One thing I enjoy seeing in those, and I would encourage others to do the same, is to ensure that they’re bringing in international speakers to those events. So, some of the great tech events I’ve been into at Colombia have a combination of speakers from the local Colombian tech community, and that’s great for them to get up on stage and to share all the expertise that they have, as well as bringing in speakers from tech companies in the US. And that’s a good in both directions, right? It helps to bring some of that international perspective to the Columbia workforce, which might include those attending the conference. Additionally, it’s suitable for US speakers to have the opportunity to join a tech conference in Colombia, see the diversity and wealth of talent in these countries, and witness the excellent work they’re already doing. And so, then they get to go back to their company in San Francisco in the US and be able to spread that word as well and say, I was in Medellín, and I was at a great JavaScript conference, and there’s an excellent tech community there.

We should be looking at more, too. It’s a two-way street; I believe encouraging international collaboration at events like these is essential. And then, of course, in our community, we talk a lot about AI. At our company, we develop AI-driven applications, but that requires a different type of technical skill. I think the other thing that I would recommend in general, and countries in Latin America are already doing this, I mentioned data center initiatives in Chile, AI centers of excellence in Colombia, for example, but encouraging them to continue to get ahead of the curve on AI-enabled workforces because it’s undoubtedly something that regardless of the country we’re from, all of us face in the workforce and that changing dynamic in the workforce. The more they can incorporate that into university education, the more beneficial it will be for their workforce in the coming years.

LATAM FDI: Well, we’ve covered a pretty good expanse of information over a relatively short period. One of the things that we commonly experience with our podcast is that people, after listening to the discussions, have questions. How would anyone with a question get in touch with you to get an answer?

Arin Sime: Yeah. I’d be delighted to hear from any of your listeners. You can find us at www.agilityfeat.com. This is our corporate website. You can also find us, AgilityFeat, on LinkedIn and YouTube, and contact us through there. Or you can find me on LinkedIn. Again, my name’s Erin Sime, A-R-I-N-S-I-M-E. And look me up on LinkedIn, and I’d be delighted to speak with you as well. So, yeah, I enjoyed the opportunity to speak, Steve. Thank you.

LATAM FDI: Well, what we’ll do to make things easy is we have a transcript section of the podcast. In the transcript section, we’ll include a link to your LinkedIn page. We’ll have your website. If you’re interested, please send me an email later, including a phone number if possible, and we’ll proceed accordingly.

Arin Sime: Sure. Absolutely. Okay? Absolutely. Thank you so much. I appreciate it.

LATAM FDI: Well, it’s been an interesting conversation. Have a good afternoon.

Arin Sime: Thank you for inviting me to record this podcast. I’ve listened to a lot of them, and I’m learning a lot myself from all of the wonderful people you have interviewed. So, it’s been an honor to be a guest on it as well. Thank you.

LATAM FDI: Well, thank you for that.

Marcial Smester
Investment Director
ProDominicana
marcialsmester@prodominicana.gob.do

LATAM FDI: Welcome to the LATAM FDI podcast. These recordings speak to individuals with expertise in foreign direct investment in Latin America. Today, Marcial Smester is with us. He’s the investment director at ProDominicana, located in Santo Domingo, Dominican Republic. How are you today, Marcial?

Marcial Smester: Hello, Steve. Good afternoon. How are you, my friend? I’m good. Everything is good down here. It’s very sunny, a little bit warm, but good.

LATAM FDI: That sounds very appealing to many people in the United States and other regions listening to this podcast. Today, though, we want to learn a little bit about what’s going on in the Dominican Republic. And we would like you to tell us a bit about yourself and your organization.

Marcial Smester: Of course, sure. Well, my name, as you mentioned, is Marshall Smester. I am the Director of Investment for the Export and Investment Center of the Dominican Republic, known as ProDominicana. This is the Investment Promotion Agency of the Dominican Republic Government. We are responsible for promoting the Dominican Republic in international markets to attract foreign direct investment and position all products in these markets, whether goods or services. I oversee the investment aspect of our operations here in ProDominicana.

LATAM FDI: Can you outline some of the key economic advantages the Dominican Republic offers to make it an attractive destination for foreign direct investment?

Marcial Smester: Of course. First and foremost, we have been, if not the most, at least one of the most stable economies in our region. When I refer to our region, it extends beyond our specific area in Central America and the Caribbean, encompassing all of Latin America and the Caribbean. The Dominican Republic, for example, became the seventh-largest economy in Latin America and the Caribbean last year, alongside Mexico, Brazil, Argentina, and other more prominent countries. And we just became the seventh one. Looking ahead to the next 5-10 years, as we aim to become the fifth largest economy, we’re working towards that goal.

Additionally, we’ve enjoyed a remarkably stable economic outlook characterized by nearly 60 years of uninterrupted macroeconomic stability, with average annual growth exceeding 5% of our GDP over the entire period. For example, in 2025, we are expected to grow at a rate of 5%, similar to the growth rate in 2024. That would be more than double the Latin American average expected. And the world is expected to grow by 3% so that we will increase by 5%. So, it’s higher than the world average as well.

We also have a very stable political climate, political stability that we enjoyed for almost the same period, no matter what type of government comes into and takes over government. No more of the ideology; it doesn’t matter. Economically, it’s always seen from any idea to maintain it. We also have judicial stability, which is very important for investors to look into the Dominican Republic, which brings social stability. And from how I started, we’re one of the most stable countries in our region, if not the most stable one in every sense.

LATAM FDI: Well, how do the country’s strategic location in the Caribbean and the trade agreements that it has enacted, such as the DR-CAFTA, facilitate access to major markets and foreign investors?

Marcial Smester: Our strategic location is critical because that’s one of our advantages in the Dominican Republic. We are located in the heart of the Americas. We’re an hour and a half by air from Miami, two days to days, and a bit more than half by sea. And that’s from the ports in Santo Domingo, the South. If we take the northern ports, like in Manzanillo, it’s a day and a half to the Port of Miami, more or less. So, we are strategically located. We are not a big country but we are around 40,000 square kilometers. We have a little bit of everything here. It’s not just for tourism; we’re also an industrialized and agricultural nation. And of course, with the trade agreements that we have, first and foremost with the United States, which is our leading trade partner in Central America, the DR CAFTA, things producing the Dominican Republic can enter tariff-free for a majority of products, goods, and services, going into the United States and vice versa. However, we also have the economic protection agreement with the European Union, which is a free trade agreement with Europe, and it’s in the overall sense.

They are also part of the CARICOM for trade within the Caribbean and the CARU Forum, which by extension includes the United Kingdom on its own, where we also have access to free trade with them. We also have a generalized system of preferences for specific products in different countries. We can go as far as Australia and New Zealand from the Dominican Republic, depending on the product or the goods and services that it would be. We also have a separate partial free trade agreement with Panama. We are still working with other free trade agreements or bilateral agreements with other countries, including Middle Eastern countries, which are, as we speak, being reviewed and under development. Within the next few years or decades, we will have amplified trade agreements to reach the world more. For example, out of those free trade agreements that we have ongoing, we have access to over 1.2 billion consumers. So that’s an incredible market for companies to establish themselves in the Dominican Republic and produce, whether they’re goods or services, and take them out to the world.

LATAM FDI: You discussed how the Dominican Republic makes a suitable environment for foreign direct investors. But what specific incentives, such as tax benefits or a special economic zone, does the Dominican Republic provide to encourage foreign investors to come and set up shop in your country?

Marcial Smester: Of course. Before I go into that question, there was something that I left out in the previous question that was important, for example, that we enjoy a robust infrastructure, logistically speaking. We have the Dominican Republic, operate eight international airports, and have twelve commercial ports actively operating in the Dominican Republic. So, in any part of the Dominican Republic where a company wants to establish itself, it will be within reach of an airport or a port within 2-3 hours max. Investors need to know that a ninth airport is being built in the Southwesternmost part of the Dominican Republic, a tourism development zone in Manzanillo. We have six cruise terminals in operation, with a seventh underway in Samana. That contributes to the strategic advantage and logistic superiority that we believe that we have. We have access to 28 or 33 Caribbean islands from the Dominican Republic currently operating and underway. We provide foreign investors by answering your question about our incentives and benefits or special economic zones. The Dominican Republic has a robust legal framework for investors to come into the Dominican Republic.

It depends on the sector. Not all sectors have special incentives, but the top sectors do have them. And I’m going to start, first of all, with one law that will amplify and impact any foreign investor: Law 1695 for foreign investment. That law, first and foremost, guarantees equal treatment to an international investor or a foreign investor as if it were a national or local investor, meaning there’s no discrimination whatsoever. You can form a company here and have it 100% wholly owned by an international company, with headquarters elsewhere in the world, not in the Dominican Republic. You will enjoy those benefits. Plus, it provides liberalization of dividends and repatriation of capital without any retentions whatsoever, plus free currency convertibility. You’re producing pesos because that’s the official currency in the Dominican Republic, the Dominican peso. Nonetheless, when sending it back home, you can change it to US dollars, Canadian dollars, British pounds, the Euro, Japanese Yen, or any currency you seek to change. And there’s no inconvenience on that. It’s free. Also, as an investor, if you establish yourself in the Dominican Republic, the law provides you with residency for investment for your stakeholders.

 In that sense, once you establish yourself in the Dominican Republic. When we go into the sectorial laws, we have several key sectors with interesting incentives. We can go, for instance, to the special economic zones or free zones, as we call them in the Dominican Republic; there’s a particular law, law 890, which provides a lot of incentives. It’s a tax-free regime. Within the free zone or special economic zone regime, you can house many activities as long as you manufacture or export the service because it’s focused on exports. So, any company that can come to the Dominican Republic and establish itself here in the Dominican Republic, produce, and then re-export it out. You have a tax-free system with no corporate income tax, no capital gains tax, no tax on the machinery that you import to produce whatever you’re going to produce and operate, no taxes on the raw materials that you use, whether you buy them in the local market or import them as well, no municipal taxes, no federal taxes whatsoever. So, it’s a tax-free-based system because the key idea of that sector or regime is to improve employment and employ Dominicans.

The key here is that the labor laws require 80 % of the labor force to be Dominican. Then you go into tourism, and tourism has its laws, the CONFOTUR law and law 5803, which provide different incentives for hotel or real estate projects oriented towards tourism. It could also be a hospital but always oriented towards tourism, where you also receive incentives. Tourism, for example, is more restricted during this period because, in economic-free zones, there is a 10-year exemption, but it’s renewable. So, the first company was established here for the free economic zones in 1969, when the original started developing free zones, and companies are still enjoying those incentives today. In tourism, it’s a 15-year period where a project can enjoy, for example, exemption on income tax on local municipalities and royalties taxes, and also all taxes regarding the furniture and anything that has to do with the putting in operation of the hotel or the resort of the project or the real estate development area. So, it has interesting incentives there. Also, you have, for example, La 5707, which is for renewable energy projects. Right now, the Dominican Republic is the number one recipient, not only in the Caribbean and all of Central America, in overall FDI but also the number one recipient in our region’s renewable energy projects and tourism projects.

We continue to be leaders in that. There are some interesting incentives as well. Other laws for other activities have incentives that will make an investment more interesting and an interesting opportunity for investors to come to the Dominican Republic.

LATAM FDI: You spoke much about the country’s political continuity and stability over the last several decades. Regarding the macroeconomic environment, what measures has the Dominican Republic implemented to ensure investors do not experience economic volatility when doing business there?

Marcial Smester: One of the things that we take into heart, and the government takes into heart most, is our central Bank, which establishes the monetary policies to abide by. Within the Dominican Republic, we have the same governor of the Central Bank, who used to be like the chief of the Fed for the United States, Alan Greenspan, which have decades in it. Our chief of Central Bank, the governor, has been running it for decades, which has helped create a very stable environment with the monetary policies issued. We follow a lot of how the United States manages itself, so we are very keen on that, and we follow it. But also, every time the government changes, it doesn’t matter who enters it. One thing that everybody in the government thinks of is that we have to maintain macroeconomic policies and continue the economy. We continue to grow the economy in that sense. So, we must always respect the laws and grant judicial stability for businesses in a business-friendly environment with much government backing and support. That’s how we’ve operated through time. It doesn’t mean we’re perfect and have no flaws because situations arise.

But in general, the Dominican Republic has an incredible business-friendly environment. Its policies, laws, and follow-up on those laws make it a friendly place to invest.

LATAM FDI: You mentioned that many people around the globe appreciate the Dominican Republic for what it offers in terms of tourism, but there are other opportunities for investment in different sectors in terms of FDI. Please tell us a little about those other sectors and give us an example of a success story.

Marcial Smester: Sure. Well, we have a lot of FDI in multiple sectors. I can tell you, for example, as I mentioned in the energy sector, where we have one of the largest corporations in the world, AES Corporation from the United States, which is the largest natural gas operation in the Dominican Republic, currently speaking. We have a lot of renewable energy projects, projects from renowned companies such as Acciona from Spain, STOA from France, Eco Ener from Spain, and many others. AES is also developing some renewable energy projects in the Dominican Republic. Those are very examples of other sectors. For instance, we have critical international entities in the financial industry, such as Scotia Bank from Canada, City Bank from the United States, and many others. In the mining sector, it’s imperative. We have significant projects in mining, such as Barrick Corporation from Canada and the United States, which operates the fourth largest gold mining operation in the world, right here in the Dominican Republic, among others. For example, we have many international companies in the manufacturing sector, especially in the last few years, and they abide by the free zone regime, but in the manufacturing aspect, for example, medical devices.

The Dominican Republic has become a hub for medical devices in our region, medical device companies. We currently host eight of the world’s largest medical device output companies, including Medtronic from the United States. We have an issue cabin from Germany. We have Rockwell Automation, which does electrical parts. We have Color Hammer, which is also named Eaton, and it is also for electrical parts. We are the third largest exporter worldwide of circuit breakers, for example. You might not have known that we are the largest exporter of circuits to the United States in that fashion. We have many important companies established here in the Dominican Republic in different sectors and areas, taking advantage of the incentives and amenities the Dominican Republic offers.

LATAM FDI: You mentioned at the beginning of this discussion that the country is doing a lot to fortify its position in terms of a logistics hub. You talked about airports; you spoke of ports. But I’d like to ask you about the human infrastructure now. What advantages does the Dominican Republic offer to potential investors regarding human resources?

Marcial Smester: Well, compared to the countries in our region, we have a very good-sized population. Right now, as a non-English-speaking country, because our official language is Spanish, we are the second country with the highest English proficiency in our region of Central America and the Caribbean. So, we have a lot of people. For example, during the past four years, the government has backed up an English Immersion program, which yielded over 80,000 potential candidates with English-speaking skills. Aside from that, we have also hosted a lot of VPOs in centers in the Dominican Republic with excellent English speaking skills and pronunciation that is understandable and Americanized in that sense. For example, we have a vast labor force from universities every year. For instance, we have, during the past four years, over 9900 ICT graduates. We have almost 54,000 business and economic sciences professionals who have graduated in the past four years. We have nearly 16,000 engineering professionals and over 35,000 health professionals, including doctors, nurses, etc. We have more than fifty higher education centers, plus our top universities right now have links and associations with the top colleges and universities worldwide, such as Harvard, MIT, Stanford, Oxford, Cambridge, the UK, and so on.

Plus, the more Before we continue to go on in time, for example, for the regular workforce, every time it’s more highly skilled. For example, when I mentioned medical devices, let me go back. Initially, our free zones or special economic zones were textiles. From 1969 to almost 2002, over 80 % of production was textile, which is very basic, right? However, a plan structured public and private sectors together to develop higher-scale activities within the special economic free zones and highly-skilled manufacturing. We started operating the medical device and electrical parts sectors, which are very developed today. We are one of the top two countries in our region, bringing in companies to establish medical devices. That requires a more highly skilled, capable labor force because it’s more technologically advanced, plus the health and hygiene that you need to apply to this type of company because of the products and items they produce and manufacture. So, our workforce is very highly skilled. In the Americas, for example, the United States deemed us one of the top countries to be looked at, and we have, for example, four semiconductor manufacturers in the future.

After that, we will be one of the countries that can provide semiconductor manufacturing. We will start because we are ready for the ATP aspect, assembly, and packaging. But of course, we want to develop and acquire the knowledge of the technology required to do other parts of the processing and manufacturing in time, of course, because that will take time. It will likely take a decade or so to reach where we need to be. However, we also focus on automotive manufacturing, starting with assembly, because we have the capability. That will also provide a more highly skilled labor force in the future. We are attracting companies to come here and establish themselves because of the logistical and location advantages that we have right now. However, we are coordinating as a country and the public and private sectors to open up new industries and activities. For example, there’s a plan from the government for the next 12 years, by 2036, to duplicate our GDP in the overall sense.

And that means it’s not only small agricultural products; we must bring more advanced and highly skilled industries into the Dominican Republic. And that means, at the same time, that we have to transform our labor force and continue to develop a more highly skilled labor force in the overall sense to provide this for investors to come in. If there’s a new industry, of course, the investors that come in will be ground-breakers, and they will have to help with the know-how and teach that, and then we replicate it overall. There’s a particular institution from the government called Infotec, which is a technical formation for professional institutes. And that institute, everybody in the Dominican Republic, that’s a fee that every company pays for all employees. And that is to subsidize that institution so they can train the entire labor force for all companies in the Dominican Republic.

LATAM FDI: One thing that struck me was the speed with which the Dominican Republic entered higher levels and higher requirements for manufacturing. You mentioned that everything was textiles up to about two thousand, and then you diversified into several other industries. If I, as a manufacturer, would like to look at working in the Dominican Republic, I have two questions that generally get asked. Number one, for direct labor, what is the fully loaded cost, generally speaking, in the industry for direct labor?

Marcial Smester: Well, it depends on the activity in the sector. But even in a free zone, the cost is not that high. The minimum salary would go around $400 a month overall. It could be less, depending on the skillset. It’s around… I don’t have the exact figure, but it’s around $400 a month. Companies pay slightly more depending on their employee scale, but there’s a scale. However, we are one of the most competitive countries in terms of the labor force, even with our skill set. What was the other question?

LATAM FDI: Well, the other question that always comes up is within the first five minutes of discussions that I have with potential investors. In addition to the labor cost, they’ll typically ask, what’s the cost, either per square meter or per square foot of grade A industrial space?

Marcial Smester: Okay. Depending on the industrial park, for example, in our special economic zones or free zones, there are different tiers of parks. The majority of the parks right now, for example, the closing of 2024, have ninety-one industrial parks in operation, whereas seventy-one are privately owned. Now, depending on the tier, for example, the top tier parks that we have in the Dominican Republic that have everything and provide every type of service to a company, especially those that were most medical device manufacturers, are established because they have the best facilities, let’s say. The square meter lease would go for around $7.50 and $8 a square meter, more or less. It all depends on where you’re located. If you go to, let’s say, a tier three park still privately owned, the price drops down to $450, more or less, per square meter. But you have fewer facilities or services that the park will provide for you. It’s not as beautiful or as pretty as a tier one, but it has more ambiance and is different. But you always have the essential services and a customs office there to help with the merchandise going out.

But yes, it depends on the tier of the park, but you can go as high as, let’s say, $8 a square meter, a little bit less than $8 a square meter. From the last time, I saw the numbers, you could go as low as if you go to a tier five park, which is more of the public sector park available, handled by an institution in the government called Austria, and it will go as low as 250 per square meter, for example, the least, and maybe even negotiable. So, it all depends. But the lower the tier of the park, the more expensive it is. Tier one is the most expensive park; with every type of service you might think of. Some come included in the arrangement, and others are marginal, which you might decide to select. Parks, for example, help you. The private parks mainly help you with the hiring or the least profiling of the personnel you need. And they already have a database for personnel they’ve interviewed, even though you can have your own human resources department. Nonetheless, if you want the park to do everything for you, then you arrange it with the park, and they can handle all your administrative and human resources departments as a company.

However, they help out nonetheless as a minimum service they agree with.

LATAM FDI: This conversation has been very educational over the last 20 minutes. In addition to the questions I ask, after individuals listen to these podcasts, they have questions that come to me. But what I like to do is to make those questions go to the speaker directly. So, if somebody has a question after listening to this information, what communication can they get into with you? Do you have an email address they could use to contact you?

Marcial Smester: Sure. I’ll provide you with my email address; they can contact me directly. Whenever they have a question, they access it, and I’ll connect them with my team to further those conversations. But we’re open to it. We work here 24/7. We’re available. We might not get back to you quickly, but we will reply as soon as possible. You also have my WhatsApp number. In any case, they can contact me that way as well. And we can answer and reply and start a conversation. But we welcome anybody and everybody who wants to take a look at the Dominican Republic to explore. We cordially invite all your listeners to hear what we’re saying and explore and feel it independently because it’s different. I can say many marvelous things about the Dominican Republic. I can show you in a presentation, but to feel and grasp it in real-time is a different story, and it’s even better.

LATAM FDI: Instead of going to see you physically, I’m sure that you have a website. Do you have one? And what would that address be?

Marcial Smester: Yes, our website is www.prodominicana.gob.do

LATAM FDI: Okay, we’ll include that in the transcript section of this podcast. If it’s okay with you, I’ll include a link to your LinkedIn profile. Would that be okay?

Marcial Smester: That’d be okay. Perfect.

LATAM FDI: Thank you very much for joining us this morning. The Dominican Republic has been on my list of places to visit, and hopefully, I’ll get a chance to visit you there.

Marcial Smester: I look forward to welcoming you, hosting you, and showing you around. Please do.

LATAM FDI: Thank you very much.

Maria Paula Arenas
Vice President of Investment
ProColombia
US Investment Advisor
aecheverri@procolombia.co

LATAM FDI: Hello. Welcome to this episode of the LATAM FDI podcast. In these recordings, we have the good fortune of speaking to economic development and business professionals in Latin America about foreign direct investment topics. Today, we’re pleased to have Maria Paula Arenas with us. She is the Vice President of Investment for ProColumbia. Hello Maria Paula. How are you today?

Maria Paula Arenas: Excellent, Steven. It’s a pleasure to meet you and join you today. We are eager to discuss the assorted opportunities available to investors in Colombia.

LATAM FDI: Before we begin, please introduce yourself and your organization, ProColumbia.

Maria Paula Arenas: Yes, of course, Steven. My name is Maria Paula Arenas. As you told everyone, I’m the Vice President of Investment at ProColombia. I have experience at Colombia’s Ministry of Foreign Trade, Industry, and Tourism. I want to tell you what Procolombia is like. Procolombia is a Colombian investment promotion agency.

Additionally, it promotes exports and non-mining exports to attract investments and tourism. This entity is linked to the Ministry of Trade, Industry, and Tourism. First of all, as I mentioned, we promote Colombia worldwide. Additionally, we implement public policies, primarily those issued by the Ministry of Trade, Industry, and Tourism.

LATAM FDI: You have an excellent organization that works to attract foreign investment in Colombia. With that in mind, can you tell us which economic sectors attract foreign investors who come to you for advice?

Maria Paula Arenas: Yes, of course, Steven. This is important for you to know and for everyone to be aware of. We have seen and followed, of course, our national development plan. There are economic sectors where investors can find opportunities. But I will mention five. We have the agro-industrial sector. We have pharmaceuticals and health issues in various sectors. We have Astilleros, which are aeroespacial. We have the infrastructure, of course. And we have renewable energy. I want to mention one additional point, which is very important for us as a sector to attract investment and also serves as an enabler to attract investment: services and added-value services. So those are the main sectors where investors can find specific and vital growth.

LATAM FDI: You mentioned the energy sector in which you’re working to attract investment. Can you tell us about the transition and reindustrialization happening in Colombia, how the energy sector fits into that, and what your sustainable focus is?

Maria Paula Arenas: Yes, of course. The first thing to note is that the point of departure is that we now have a range of industrialization policies, and the renewable energy sector has been included in this reindustrialization plan as a public policy. This is one of the key points of departure, and another point that highlights the importance of this sector in Colombia is that it is included in our National Development Plan. It means we have a long-term and a short-term plan, like a roadmap, to make this transition. And I want to highlight this because, of course, this transition takes time. It takes a lot of effort. Colombia is trying to make this possible, and, of course, bearing in mind that it takes time. The important thing is that we now have a roadmap.

Another critical point is that Colombia has one of the cleanest energy matrices in the world. This is a natural resource. It is our most significant added value for this sector, particularly in the context of the energy transition.

The Ministry of Mines and Energy is building a roadmap that has already been established. What we do at Procolombia is to promote this roadmap, informing investors about the current and future opportunities available to them. This is important for you to know, Steven, because transition takes time and a lot of effort, as I mentioned earlier. However, what we want to do with investors is tell them the truth about their opportunities in Colombia. It is essential for us in Colombia to promote this.

LATAM FDI: Besides mentioning the opportunities in the sustainable energy sector, do you have a specific strategy for pursuing them?

Maria Paula Arenas: In ProColombia as a promotion agency? Of course, I would explain what we do in ProColombia. Those are our competencies. What we do, of course, is to tell investors. First, ProColombia has twenty-four offices worldwide, including eight in Colombia, located in various regions throughout the country. We work together to attract new investors first and then join and follow our existing investors who are already investing in Colombia. One of our main strategies is to reach investors interested in those sectors. It is also essential to maintain those that are already installed in Colombia. So, this means we are not trying to leave them alone, the ones already installed in Colombia. And, of course, in this work and this task, what we do is to show them the realities, the Colombian realities, meaning the opportunities they have. We have solar energy opportunities, primarily in hydroelectric energy, as well as photovoltaic energy. What are Colombia’s advantages, what Colombian legislation is essential for them to do, and what are their incentives? They can be found in Colombia because, in this sector, we offer incentives and tax benefits.

We follow them if they have any questions or doubts they want to solve. We try to help them solve them. Another thing we do is find allies for them, such as Colombian enterprises and projects, meaning Colombian entities are entitled to attract and implement policies related to the energy transition. You know that Ecopetrol is one of Colombia’s leading players in the renewable energy sector. So, we are like a breach. We identify and match the leading players with their interests.

LATAM FDI: You mentioned earlier that, in addition to your domestic offices, you have eight overseas offices, I’m sure. Other than those two areas, where can people meet you? Do you travel and participate in international events? In particular, can you tell me a little bit about the Colombian Investment Summit?

Maria Paula Arenas: Yes, this is important. One of the primary services we offer at ProColombia is establishing a presence at the main events in each sector. This means that we have a presence in energy transition and are present in most of them. It just asked about the Colombia Investment Summit. This is a significant event that we host at ProColombia. It’s like a brand of this vice presidency. But I have to tell you something. We have been facing budgetary challenges here at ProColombia and in Colombia. We are trying to allocate and manage our budget in a cost-efficient manner. We aim to elevate this year’s Colombia Investment Summit to something more significant than the previous one, a business matchmaking forum. The event will take place in Cali in July. This is very important, Steven, because ProColumbia promotes investment, exports, and tourism, as I mentioned. We will also host this forum in Cali, focusing on these three axes. It will take place on July 8 and 9, 2025.

Please note that you’re more than welcome to attend this event. We are trying to make a Colombia Investment Summit in Cali. We have an academic agenda, but more importantly, we will also have a business matchmaking movement during the session. It will be essential. We had a similar experience in November of last year in Mexico. It was very successful. However, this time, in terms of investment, we also have an academic agenda, which serves as a brand when we host the Colombian Investment Summit. So, this is very important. Thank you for that. This is an opportunity to invite you, our listeners, and the audience to come to Cali and Colombia to attend this significant event.

LATAM FDI: Well, thank you very much. I know you’ll have good attendance. That being the case, in addition to the United States, which I would guess is your country’s most prominent trade partner, what other countries are significant investors in Colombia?

Maria Paula Arenas: Yes, of course. I want to emphasize that the United States is our leading trade and investment partner. This is like a dual ally for us. However, I will also tell you we have other vital partners like Spain. And Spain is Colombia’s first investor, our first non-mining investor. It’s an important country for us in terms of investment. We have France, the United Kingdom, Chile in Latin America, Canada, Mexico, Germany, and Brazil, among others. However, the United States and Spain are the leading investors.

LATAM FDI: Regarding the United States, what is ProColumbia’s current strategy for appealing to an American investor audience?

Maria Paula Arenas: It is important to note, Steven, that the United States is a key ally for us, particularly regarding investment and trade. As I mentioned, our approach at ProColumbia is to first connect with investors, attract them, and inform them about Colombia and its opportunities. This is our task, and we need to inform US investors about the truth regarding Colombia and the opportunities it offers. We do this task, and we will continue to do this. And, of course, something significant I mentioned to you is that for the already established investors in Colombia, what we want to do at ProColombia is to join them and follow their lead. We want them to know they will still be with us once they arrive in Colombia. We will follow them. Many times, you encounter difficulties in continuing your investments. You need more information. For instance, you need to know more about new regulations as an investor. In ProColombia, we aim to do this by informing investors and helping them understand these concepts.

We do this, and we will continue to do it. This is what we call our after-care service, and we are here to provide it.

LATAM FDI: You look at the US from a macro perspective. However, I know you’re considering partnering with local organizations in the United States, particularly the North Carolina and Indianapolis Chambers of Commerce. What do you do with regional entities like these to promote Colombia?

Maria Paula Arenas: Excellent question. This is an essential question because this is new. Thanks to our team in the US, who are joining us today for this interview. They help us and are committed to helping ProColombia fulfill our tasks. We have established a Memorandum of Understanding (MOU) within the North Carolina Chamber of Commerce to foster a strategic alliance emphasizing trade and investment relations between Colombia and North Carolina. So, it’s new, and it’s new because, of course, when you think of North Carolina, in the past, we may have seen it as very far away, yes, but now we see all the opportunities and all the things we can do together. And This MOU shows this. For instance, the MOU includes enhancing trade and business relations, developing and supporting platforms, implementing a detailed action plan, and facilitating joint advisory services, training programs, trade missions, events, and exhibitions. At ProColombia, this is an excellent start to achieving more significant goals.

LATAM FDI: Well, I’m located in Tucson, Arizona. Have you ever explored any collaborations with Arizona?

Maria Paula Arenas: We have to look closer to this, and we will do that.

LATAM FDI: Well, it’s a wonderful place to visit, Anna. If you do, we will do the same.

Maria Paula Arenas: Yes, it’ll be significant for us, and we’ll be there to join you.

LATAM FDI: One of the consistent themes throughout these conversations, which I have the good fortune of having with people like you, is that often, after listening to the recording, the audience has questions. I like including a mechanism on the website that enables people to send questions directly to you.

Maria Paula Arenas: Yes, of course.

LATAM FDI: If someone has a question about any topics we’ve discussed, can they contact you? If so, how should they do that?

Maria Paula Arenas: Of course. Feel free to do so. You can contact me at our Miami or New York, United States office. We have great people in ProColombia and our team here in Bogotá. So, feel free to do so.

LATAM FDI: Is there an email address that I could publish?

Maria Paula Arenas: Of course, you can do that.

LATAM FDI: Okay. I’d also like to include a link to your LinkedIn profile. Would that be okay?

Maria Paula Arenas: Yes, of course. Okay. We can send it to you. Of course, we have one.

LATAM FDI: Well, listen. I want to thank you. I know that you’re a very important and busy individual.

Maria Paula Arenas: No, not at all. It’s been a busy day, I will tell you. Today it’s been a busy day. But of course, we’re here. I am here, and I want to thank you because these spaces allow us to convey the realities and assure investors that they can count on us. They can count on ProColombia to arrive in Colombia and to still believe in Colombia. So, thank you, Steven. Thank you.

LATAM FDI: Well, thanks for participating. I hope the rest of your day is slightly less hectic than it’s been.

Maria Paula Arenas: No, thank you. I appreciate your and my team’s efforts.

Javier Viveros
Vice Minister of Investments and Exports
Rediex Paraguay
jviveros@rediex.gov.py

LATAM FDI: Hello. Welcome to another episode of the LATAM FDI podcast. In these recordings, we have conversations with people in the Latin American region and experts in their fields. Today, Javier Viveros is with us. He’s the Vice Minister of Investments and Exports for an organization called Rediex in Paraguay. Javier, could you tell us a little about yourself and your organization?

Javier Viveros: Yes, thank you very much, Steven. I am happy to be part of this program. And of course, I can tell you a little about myself, but I would like to start with my country, Paraguay. I don’t know if many people know where Paraguay is, what our identity is, or what Paraguay stands for. But Paraguay is a small country in the center of Latin America. We are a landlocked country surrounded by Brazil, Argentina, Uruguay, and Bolivia. We have the strength of our riverways, which helps us connect with the world. Of course, we are a very, very green country. We are the biggest producers of green hydroelectric energy in the world. We have two dams, Itaipu and Yacyretá. The first is with Brazil, and the other is with Argentina. There are a lot of business opportunities in Paraguay. I come from Asunción. I was born in Asunción, which is the capital of the country. I studied there. I made my career here in Paraguay. Then, I went to the Berkley Haas School of Business for a little while at the end of my studies. Now, I am working as vice minister of investment and export for Paraguay.

LATAM FDI: Today, we have a few questions for you. Is it all right if we get to them?

Javier Viveros: Yes, of course. Go ahead.

LATAM FDI: What are the key industries in Paraguay and those that offer the most business opportunities in Paraguay and the potential for foreign investment? How competitive are they?

Javier Viveros: Yes, Paraguay has a lot of things that make it very competitive. First of all, I would like to tell you that we are a beacon of macroeconomic stability. Paraguay is the country that built this economic stability in its policy for economics. We have an inflation rate of 4% on average. Also, we have an average GDP growth of 4% every year. We have a debt of 33% of the GDP, so it’s pretty stable. Most of the region sees us as a very stable country for doing business. That’s why we are leading the business ranking in Latin America for the fourth consecutive year. Another thing I’d like to tell you is that we recently achieved an investment grade. That is a very important thing for us, and it has dramatically changed our situation as a country. The eyes of the world are now watching Paraguay and what we are doing. With this, we can tell you that we also have a very convenient tax scheme, which is 10% for the corporate tax, 10% for the taxes for individuals, and 10% for the VAT. That’s it. It’s straightforward. That gives you an average of 34 % profit in every business we have here. Because of these things, there are many business opportunities in Paraguay.

That makes our country very attractive for some businesses. I want to tell you more about it.

LATAM FDI: One of Paraguay’s most successful programs in recent years has been its maquiladora program. Please explain how you attract foreign investors and outline the cost advantages they can expect.

Javier Viveros: Excellent. First, I wanted to tell you more about Paraguay’s sectors and business opportunities. The industry I think is the most important right now is agribusiness. Agribusiness is very important in our country. It’s almost 70% of the nation’s GDP, so it’s essential. However, we also have other sectors, such as land and biomass; livestock and meat are robust here in Paraguay. Of course, as you tell the audience, manufacturing under the Maquila Regime is very strong here because many companies from Brazil or Argentina are coming to produce the goods here. Then, it is supported again by their countries or other countries in the region. I want to explain the maquiladora industry to you more. The maquila is something very, very simple. It’s like you only have to pay 1% as tax for the goods you produce in the country and exports. The main thing about maquila is that you have to produce these goods in Paraguay and export them all. You can only leave 10% of your production in the country. That is how you get this tax discount. This regime is very popular. We have more than three hundred companies operating in this regime, representing more or less 1.2 billion dollars of exports for our country. So that’s more or less the 10 % of the country’s exports. So That is growing very fast. Of course, we are facing a lot of challenges with the regime. So, we are constantly adjusting the law. But now we offer an excellent opportunity for companies considering entering the Mercosur market.

LATAM FDI: What role, speaking of Mercosur, does Paraguay play in terms of its participation in Mercosur? And how does Mercosur help Paraguay access regional and international markets?

Javier Viveros: As I told you, Paraguay is a very stable country. We offer many business opportunities in Paraguay for companies and foreign companies that want to establish themselves in the country. Of course, maquila is very important, but we also have other incentives. For example, law 690 allows you to import goods of capital without paying any taxes. You can establish your factory, for example, or your facilities here in Paraguay. You can combine that, for instance, with the maquiladora. After that, you produce here and export to the region, and you will have access to a market of almost three hundred million people in the Mercosur region. So, we are a door of entry for the Latin American market, a very stable one. People are starting to understand this. Of course, we are receiving a lot of investors interested in business opportunities in Paraguay, what we are doing, and how Rediex can help them to establish their investment in our country.

LATAM FDI: What infrastructure developments and connectivity options are available to support supply chain logistics, trade operations, and business opportunities in Paraguay?

Javier Viveros: So, in Paraguay, as I told you, waterways are very, very important. It’s a vital trade route, particularly for agricultural exports. Seventy percent of agricultural exports are transported by water. It’s essential for us. The main thing about this is that we have to invest here. So that is also a wonderful opportunity because we doubled the logistics volume in the water transport here in Paraguay with some investment. That is also a good opportunity. Many of these companies I told you about in the maquiladora industry have installed their facilities in Alto Parana, a state near Brazil. Our roads and highways are also vital because they connect us with neighboring countries like Brazil and Argentina. This year, we are investing more than 400 million dollars in new roads to connect the country, not just with our neighbors, but also with other regions that need more development, for example, the Chaco region, which is something exciting for business opportunities in Paraguay in the future, especially in the area if logistics, because the road will pass through the Chaco. It will connect São Paulo with Iquique. Puerto de Santos, near San Paulo, will connect with Iquique on the other side of the continent. It will be like the Panama Canal but built as a highway.

LATAM FDI: You mentioned that most Paraguayan companies participating in the maquiladora industry are from Brazil and Argentina. Is there any US investment in the maquila industry in Paraguay? Do US companies seek business opportunities in Paraguay?

Javier Viveros: We have some US companies in the maquiladora industry here in Paraguay, especially in the food sector. It is very important. They produce and process the food here because we have the raw material and then send it to the US and other countries, not just the US. Maybe the capital could be from the US, but the destination of the goods could be anywhere. No, that’s not a problem. It’s not a limitation of the maquiladora program.

LATAM FDI: How does Paraguay’s skilled workforce and labor market flexibility align with the needs of foreign businesses seeking business opportunities in Paraguay?

Javier Viveros: First of all, I need to tell you that in Paraguay, on average, the people are 26 years old. We have a lot of potential for the labor and the workforce. Also, the Paraguayan worker is a laborer who is eager to learn. I can tell you this example. Fifteen years ago, we had no auto parts factories in Paraguay. We have companies in this industry, and 90 % are Paraguayan. Of course, if there’s a company from other parts of the world, maybe they will bring some people to work as a matter of trust, skills, or something very specific. But the bulk of them are from our country. So, I think that’s a very positive thing to mention.

LATAM FDI: What’s the labor market in terms of regulatory issues? Are there flexible labor practices? What are the wages like for companies that seek business opportunities in Paraguay?

Javier Viveros: The minimum wage here in Paraguay is $370 per month or something like that. Our labor laws are very flexible, and you only have to pay Social Security, which is called IPS here. The employee pays only 9% of their salary for IPS, and the employer pays 16. 5%, then that’s it. It’s very easy to manage this, and it’s, I think, the most competitive in the region.

LATAM FDI: What political and economic stability factors make Paraguay attractive for companies that want to make long-term investments?

Javier Viveros: Maybe I can summarize this because we have investment grade. That is our quality certification right now. Of course, we must improve a lot in some areas, but we are working on that. But the main thing to consider for companies seeking business opportunities in Paraguay is we are very stable, politically speaking, and that’s something essential when establishing a new business. When you think about a new country in Latin America, of course, you evaluate that it is not just because we have the seal; it’s because that’s been happening for the last maybe 20 years in Paraguay.

LATAM FDI: Well, we’ve only had a brief time to speak about business opportunities in Paraguay, but in that short time, we’ve discussed some critical issues related to the country. When people listen to these podcasts, our experience is that they have questions for the speaker. Is there any way that people who may have questions about Paraguay can contact either you or one of your representatives?

Javier Viveros: Yes, of course. We have a website, www.rediex.gov.py. You will find a section for contact, and you can send us an email or reach us on our social networks. We always respond to messages. This is open, and usually, the team and I are very, very, very attentive to all the questions of the audience.

LATAM FDI: Another thing that we would like to do, if possible, would you allow me to put a link to your personal LinkedIn page on the page on which the podcast sits? Would that be, okay?

Javier Viveros: Yes, okay. No problem. We are open to business.

LATAM FDI: Well, that sounds great. I want to thank you for joining me today. And I wish you the best of luck in your efforts to bring more investment and employment to the people of Paraguay.

Javier Viveros: I wanted to thank you for this vital opportunity to discuss business opportunities in Paraguay, promote our country, and tell the world about what we are trying to achieve here. Paraguay is like a hidden gem in Latin America. I invite all your audience to learn more about our country. We are here to help, and I hope you visit sometime.

LATAM FDI: Thank you for joining me and taking the time to make this podcast.

Javier Viveros: Thank you very much, Steven. My pleasure.

Antonio Romero
Vice Minister of Investment and Competitiveness
Ministry of Economy of Guatemala
dmhurtarter@mineco.gob.gt
tradediplomacygt@minex.gob.gt

LATAM FDI: Hello. Welcome to another episode of the LATAM FDI podcast. In these recordings, we speak with people with intimate knowledge of foreign direct investment in the Latin American region. Today, Antonio Romero is with us. Antonio is the Vice Minister of Investment and Competitiveness with the Ministry of Economy in Guatemala. I want to welcome you, Antonio. Perhaps you could tell us a little about yourself and your organization, and then we’ll discuss opportunities for investment in Guatemala.

Antonio Romero: Thank you, Steven. It’s a pleasure to be here. As you said, I’m the Vice Minister for Investment and Competition. We also oversee competitiveness issues and work to create opportunities for investment in Guatemala. I’m part of President Arevalo’s government. I took office in February last year here at the Vice Ministry. And yeah, a key component of what we do here is work on attracting foreign direct investment. We also oversee aspects of the business climate, quality assurance for production, and customs incentives for companies that want to come to Guatemala. So, there are many things we can discuss around that. So very happy to be here, as I said.

LATAM FDI: Well, thanks. I have a few questions, and if you’d be so kind as to answer them, we can start now. First, I’d like to say that Guatemala has the largest population in Central America. And as that being the case, what role does the country’s growing consumer market and regional economic integration play in attracting FDI to your country?

Antonio Romero: Yes. Well, for one thing, I mean, as the largest market in the region, it is attractive to companies that want to do business here in different sectors because of the opportunities for investment in Guatemala. There’s a large consumer base. It is attractive in a country with macroeconomic stability and steady growth. But beyond that, Guatemala is well-positioned for companies to serve other countries in Central America based in Guatemala. And part of that has to do with the economic integration that has been happening in the region. This government continues to pursue and encourage, especially in the countries of Honduras and El Salvador. There’s a shared market of goods and services. We’re working on shared infrastructure and shared custom services. I’m missing the words aduanas, customs, and la frontera (border) to streamline trade processes, which has allowed us to become an attractive place for businesses to establish, produce, and from here, serve not only Central America but also the North American market, the US, Mexico. And with this large population, which is very young and growing, we have around 12 million working-age individuals. There are many opportunities for investment in Guatemala.

We offer an abundant, young labor force willing to work. Companies that come to Guatemala often mention that they are delighted with the labor force there. So, I think the size of our country in the context of the region and the conditions of our population, in addition to the work and the integration work with the rest of Central America, make us an attractive destination for investment.

LATAM FDI: How do government-backed initiatives and partnerships with international organizations support foreign investors in establishing and growing their businesses?

Antonio Romero: Well, there are several partnerships with different organizations. For one thing, we have bilateral cooperation and multilateral finance institutions to create opportunities for investment in Guatemala. With them, there’s a long-standing collaboration between the Guatemalan government and those institutions to foster conditions that attract investment, facilitate investment, and improve the business climate in Guatemala. So, some of the results of that collaboration have to do with finance facilities for different types of projects, especially those that have to do with the infrastructure that is necessary for companies to operate in Guatemala, technical assistance of various kinds, and also as a way to identify the opportunities for improvement that Guatemala has about the needs of companies, being energy requirements, being labor force requirements, training for the labor force, environmental regulations. So, we work with them around technical assistance and finance to improve conditions and offer facilities for opportunities for investment in Guatemala for companies operating in Guatemala, and that’s one of the aspects we work with different organizations. Then there are other organizations or international partnerships with businesses in the US and other countries, whereby there’s a dialog with companies interested in setting up a business in Guatemala or who already have part of the business in Guatemala.

And through that dialog, there’s a process of identifying the needs, the opportunities, making the connections necessary to make solutions happen, oftentimes between the government and potential investors overseas and also local investors, regarding, for example, issues with not only infrastructure, energy, communications, transportation, but also the procedures that companies need to follow to set up business and continue business in Guatemala that have to do with government offices. There’s been intense work on simplifying the democratic processes companies must go through to set up and continue their business to increase opportunities for investment in Guatemala. In those instances of dialog, we identify the issues and the solutions that the government can offer to offer the potential for synergies between government and private sectors and the integration of a dialog with the local company. So, from those dialogs, different initiatives often involve international cooperation. I guess that’s where these interactions with international partners come to fruition.

LATAM FDI: Guatemala is now a country rich in natural resources. Can you explain how that resource abundance and agricultural potential offer unique opportunities for investment in Guatemala?

Antonio Romero: So, Guatemala is very rich, as you said, in those resources. And we have a competitive advantage in that regard. We have abundant water resources, diverse raw materials, and different regions with different weather, where very distinct products can be produced. And this is attractive for industries focused on processed foods, beverages, and agricultural experts. Guatemala has expertise in these areas. This government is committed to sustainable development. There’s an opportunity to encourage sustainable practices and industries with strong, sustainable practices to come to Guatemala, take advantage of those resources, and respond to the international markets increasingly demanding more compliance to high sustainability standards, both environmental and social and other types. The energy production in Guatemala comes mostly from renewable sources, and we offer a stable and eco-friendly energy supply for resource-intensive industries. Again, this is especially true for those looking to comply with high sustainability standards. The other thing related to your first question is the access industries have to the rest of Central America and the North American market. We have port facilities, both in the Atlantic and the Pacific. These create more opportunities for investment in Guatemala.

We have borders with Mexico, Salvador, and Honduras. There’s an increasing effort to streamline the logistics services throughout the countries. And I think that’s an agenda that comes very strongly. Hopefully, we will notice advances in the coming years, especially in transportation, infrastructure, energy, and commerce facilities.

LATAM FDI: Well, thanks for that answer. I know that the country is working on strengthening legal frameworks and investment protections that enhance investor confidence. Can you tell us a little bit about those initiatives?

Antonio Romero: Sure. For starters, the macroeconomic stability I mentioned earlier is one of the key attractive factors that creates opportunities for investment in Guatemala. Exchange rates are highly stable. Inflation is very well-controlled, and government spending, in general, the financial management of the government is very prudent. We have reasonable international reserves. From that starting point, the macroeconomic scenario is very stable and provides investors with confidence.

Regarding other legal frameworks, I can speak about recent work on streamlining bureaucratic processes. There have been several new laws that have been enacted, for example, and regulations, for example, the registration guides, which make it transparent for users, primarily investors, and companies, make it very transparent what the processes they need to follow are and what the criteria the public servants have to use to assess whether it be a permit, the registration of a product, intellectual property. This reduces the subjectivity of public officials in decision-making. That’s something that this government launched and will continue to advance in different ministries. Indeed, we have that in the Ministry of Economy for different windows of attention to invest investors, and basically, that works towards greater transparency for investors and greater confidence.

There’s also a National Trade Facilitation Plan that continues to review ways the legal system and government services can streamline and facilitate commerce. At the national level, there’s the recently enacted Competition Law, which investors constantly ask about. This law will create institutions that oversee competitive practices in Guatemalan markets. So basically, companies will now have a government institution to ensure no anti-competitive barriers to new or established companies in the market. So that provides, again, the certainty to investors that they will be able to operate under the free market rules. And wherever there’s a problem, there will be an independent institution. This is going to be a Superintendency. With enough autonomy to ensure the law is well applied. There are recent laws around infrastructure, which, again, aim to streamline how big infrastructure projects are implemented, working to fix some of the current bottlenecks, especially around the Ministry of Communications and Transportation activities. So, this is to allow the work of the Ministry to be more expeditious, and that, I think, works towards this need to have better infrastructure that provides a business climate to companies.

Finally, this government has been firmly committed to transparency and anti-corruption measures to make opportunities for investment in Guatemala more attractive. I think that’s become evident throughout the first year of government that there’s a very, very strong commitment to working in all areas of government towards that. And I think that’s very important for companies you want to establish in Guatemala.

LATAM FDI: In another area, I’ve read in various places that Guatemala is emerging as a technology hub in the region. Can you tell us about any initiatives implemented to assist and create opportunities for investment in Guatemala in the tech and startup sectors?

Antonio Romero: Yeah. So last year, we launched the new governmental Agency for Investment Attraction. There was no governmental institution dedicated solely and explicitly to attracting investment. We launched that last year with its strategy. In this strategy, we have identified several sectors we will focus on in the short, medium, and long term. In the short term, those sectors that are already attracted to investors are where investment is already happening. There’s international commerce around them, such as apparel, food and beverages, BPOS, and ITOS. Then there’s the mid-term, where there’s a need to work to strengthen an ecosystem of industries so that the country is attracted to them so that their needs can be satisfied. And in between the short and medium term, I’d say it’s the technology companies. There’s already some investment in software development and startup companies. From our side, we haven’t yet started to produce specific policies for those companies. But this year, we will begin with an innovation fund, offering financial facilities for startup companies that want to work on innovation to receive specific support. I think this is an area where we need to dive in more.

The Ministry of Economy hasn’t yet gotten to the stage where we work closely with them and design policies specific to that sector. But we do see the opportunity, and it is our intention to, as I said in the midterm, speak about the next two years and be able to create actions and policies that cater to this specific sector, where we do see a lot of potential. Things are happening, but I think we need to create policies to speed up the development already happening in the country.

LATAM FDI: How does Guatemala’s participation in the Northern Triangle Regional Economic Development Strategy and El Salvador and Honduras create new opportunities for foreign investors?

Antonio Romero: Well, first of all, streamlining commerce, facilitating commerce. That produces immediate results, and companies feel immediate, reducing the times in which products have passed through the different borders, which immediately reduces costs for companies and facilitates commerce. And there’s been intense work between the Guatemala, El Salvador, and Honduras governments to work around that. That’s one thing. There are also different regional initiatives, such as the master plan on mobility and logistics, which includes investments in airports, sports, and road infrastructure. There are opportunities to see the region as one market. This already happens, but there are still challenges in mobility, transportation, and customs facilities. Rebuilding those obstacles around those areas will multiply opportunities because you will have a market of around 50 million people in Central America. The connections to the different markets, the Atlantic and the Pacific ports, are already there. For example, the flow of products from El Salvador to the ports in Guatemala is very significant. So, as we continue to facilitate these countries’ integration, it will make the Central American market in Guatemala more attractive and make it easier for businesses to come from Guatemala.

LATAM FDI: Well, we’ve covered a significant amount of area in this relatively brief conversation that we’ve had over the last few minutes. One of the things that always comes up is that people who listen to our podcast typically have questions they come to me with. However, I would like to create an environment where they can speak directly to the person interviewed. Would you be willing to provide a means of communication so that people could contact you directly, whether through a LinkedIn page or an email address or maybe through an individual who is one of your aides?

Antonio Romero: Sure, I could provide an email to one of my aides, and that would be a good way to establish contact. Well, you can email that to me later. I will place the transcript section on the web page that hosts this podcast. Just a quick question: Do you have a LinkedIn page as well?

Antonio Romero: I have a personal one but haven’t worked on my vice minister one, so that’s still pending.

LATAM FDI: Okay, so we’ll leave it with the email address for one of your aides.

Antonio Romero: Yes.

LATAM FDI: I want to thank you for joining me today. It’s exciting watching the developments in Guatemala. Hopefully, we’ll have a chance to talk in the future and discuss some things that have transpired since this day.

Antonio Romero: Thank you. Thank you, Steve. My pleasure. Looking forward to that.

Antonio Romerio
Vice Minister of Investment and Competitiveness
Ministry of Economy of Guatemala
dmhurtarter@mineco.gob.gt
tradediplomacygt@minex.gob.gt

LATAM FDI: Hello. Welcome to another episode of the LATAM FDI podcast. In these recordings, we speak with people with intimate knowledge of foreign direct investment in the Latin American region. Today, Antonio Romero is with us. Antonio is the Vice Minister of Investment and Competitiveness with the Ministry of Economy in Guatemala. I want to welcome you, Antonio. Perhaps you could tell us a little about yourself and your organization, and then we’ll discuss opportunities for investment in Guatemala.

Antonio Romaro: Thank you, Steven. It’s a pleasure to be here. As you said, I’m the Vice Minister for Investment and Competition. We also oversee competitiveness issues and work to create opportunities for investment in Guatemala. I’m part of President Arevalo’s government. I took office in February last year here at the Vice Ministry. And yeah, a key component of what we do here is work on attracting foreign direct investment. We also oversee aspects of the business climate, quality assurance for production, and customs incentives for companies that want to come to Guatemala. So, there are many things we can discuss around that. So very happy to be here, as I said.

LATAM FDI: Well, thanks. I have a few questions, and if you’d be so kind as to answer them, we can start now. First, I’d like to say that Guatemala has the largest population in Central America. And as that being the case, what role does the country’s growing consumer market and regional economic integration play in attracting FDI to your country?

Antonio Romerio: Yes. Well, for one thing, I mean, as the largest market in the region, it is attractive to companies that want to do business here in different sectors because of the opportunities for investment in Guatemala. There’s a large consumer base. It is attractive in a country with macroeconomic stability and steady growth. But beyond that, Guatemala is well-positioned for companies to serve other countries in Central America based in Guatemala. And part of that has to do with the economic integration that has been happening in the region. This government continues to pursue and encourage, especially in the countries of Honduras and El Salvador. There’s a shared market of goods and services. We’re working on shared infrastructure and shared custom services. I’m missing the words aduanas, customs, and la frontera (border) to streamline trade processes, which has allowed us to become an attractive place for businesses to establish, produce, and from here, serve not only Central America but also the North American market, the US, Mexico. And with this large population, which is very young and growing, we have around 12 million working-age individuals. There are many opportunities for investment in Guatemala.

We offer an abundant, young labor force willing to work. Companies that come to Guatemala often mention that they are delighted with the labor force there. So, I think the size of our country in the context of the region and the conditions of our population, in addition to the work and the integration work with the rest of Central America, make us an attractive destination for investment.

LATAM FDI: How do government-backed initiatives and partnerships with international organizations support foreign investors in establishing and growing their businesses?

Antonio Romerio: Well, there are several partnerships with different kinds of organizations. For one thing, we have bilateral cooperation and multilateral finance institutions to create opportunities for investment in Guatemala. With them, there’s a long-standing collaboration between the Guatemalan government and those institutions to foster conditions that attract investment, facilitate investment, and improve the business climate in Guatemala. So, some of the results of that collaboration have to do with finance facilities for different types of projects, especially those that have to do with the infrastructure that is necessary for companies to operate in Guatemala, technical assistance of various kinds, and also as a way to identify the opportunities for improvement that Guatemala has about the needs of companies, being energy requirements, being labor force requirements, training for the labor force, environmental regulations. So, we work with them around technical assistance and finance to improve conditions and offer facilities for opportunities for investment in Guatemala for companies operating in Guatemala, and that’s one of the aspects we work with different organizations. Then there are other organizations or international partnerships with businesses in the US and other countries, whereby there’s a dialog with companies interested in setting up a business in Guatemala or who already have part of the business in Guatemala.

And through that dialog, there’s a process of identifying the needs, the opportunities, making the connections necessary to make solutions happen, oftentimes between the government and potential investors overseas and also local investors, regarding, for example, issues with not only infrastructure, energy, communications, transportation, but also the procedures that companies need to follow to set up business and continue business in Guatemala that have to do with government offices. There’s been intense work on simplifying the democratic processes companies must go through to set up and continue their business to increase opportunities for investment in Guatemala. In those instances of dialog, we identify the issues and the solutions that the government can offer to offer the potential for synergies between government and private sectors and the integration of a dialog with the local company. So, from those dialogs, different initiatives often involve international cooperation. I guess that’s where these interactions with international partners come to fruition.

LATAM FDI: Guatemala is now a country rich in natural resources. Can you explain how that resource abundance and agricultural potential offer unique opportunities for investment in Guatemala?

Antonio Romerio: So, Guatemala is very rich, as you said, in those resources. And we have a competitive advantage in that regard. We have abundant water resources, diverse raw materials, and different regions with different weather, where very distinct products can be produced. And this is attractive for industries focused on processed foods, beverages, and agricultural experts. Guatemala has expertise in these areas. This government is committed to sustainable development. There’s an opportunity to encourage sustainable practices and industries with strong, sustainable practices to come to Guatemala, take advantage of those resources, and respond to the international markets increasingly demanding more compliance to high sustainability standards, both environmental and social and other types. The energy production in Guatemala comes mostly from renewable sources, and we offer a stable and eco-friendly energy supply for resource-intensive industries. Again, this is especially true for those looking to comply with high sustainability standards. The other thing related to your first question is the access industries have to the rest of Central America and the North American market. We have port facilities, both in the Atlantic and the Pacific. These create more opportunities for investment in Guatemala.

We have borders with Mexico, Salvador, and Honduras. There’s an increasing effort to streamline the logistics services throughout the countries. And I think that’s an agenda that comes very strongly. Hopefully, we will notice advances in the coming years, especially in transportation, infrastructure, energy, and commerce facilities.

LATAM FDI: Well, thanks for that answer. I know that the country is working on strengthening legal frameworks and investment protections that enhance investor confidence. Can you tell us a little bit about those initiatives?

Antonio Romerio: Sure. For starters, the macroeconomic stability I mentioned earlier is one of the key attractive factors that creates opportunities for investment in Guatemala. Exchange rates are highly stable. Inflation is very well-controlled, and government spending, in general, the financial management of the government is very prudent. We have reasonable international reserves. From that starting point, the macroeconomic scenario is very stable and provides investors with confidence. Regarding other legal frameworks, I can speak about recent work on streamlining bureaucratic processes. There have been several new laws that have been enacted, for example, and regulations, for example, the registration guides, which make it transparent for users, primarily investors, and companies, make it very transparent what the processes they need to follow are and what the criteria the public servants have to use to assess whether it be a permit, the registration of a product, intellectual property. This reduces the subjectivity of public officials in decision-making. That’s something that this government launched and will continue to advance in different ministries. Indeed, we have that in the Ministry of Economy for different windows of attention to invest investors, and basically, that works towards greater transparency for investors and greater confidence.

There’s also a National Trade Facilitation Plan that continues to review ways the legal system and government services can streamline and facilitate commerce. At the national level, there’s the recently enacted Competition Law, which investors constantly ask about. This law will create institutions that oversee competitive practices in Guatemalan markets. So basically, companies will now have a government institution to ensure no anti-competitive barriers to new or established companies in the market. So that provides, again, the certainty to investors that they will be able to operate under the free market rules. And wherever there’s a problem, there will be an independent institution. This is going to be a Superintendency. With enough autonomy to ensure the law is well applied. There are recent laws around infrastructure, which, again, aim to streamline how big infrastructure projects are implemented, working to fix some of the current bottlenecks, especially around the Ministry of Communications and Transportation activities. So, this is to allow the work of the Ministry to be more expeditious, and that, I think, works towards this need to have better infrastructure that provides a business climate to companies.

Finally, this government has been firmly committed to transparency and anti-corruption measures to make opportunities for investment in Guatemala more attractive. I think that’s become evident throughout the first year of government that there’s a very, very strong commitment to working in all areas of government towards that. And I think that’s very important for companies you want to establish in Guatemala.

LATAM FDI: In another area, I’ve read in various places that Guatemala is emerging as a technology hub in the region. Can you tell us about any initiatives implemented to assist and create opportunities for investment in Guatemala in the tech and startup sectors?

Antonio Romerio: Yeah. So last year, we launched the new governmental Agency for Investment Attraction. There was no governmental institution dedicated solely and explicitly to attracting investment. We launched that last year with its strategy. In this strategy, we have identified several sectors we will focus on in the short, medium, and long term. In the short term, those sectors that are already attracted to investors are where investment is already happening. There’s international commerce around them, such as apparel, food and beverages, BPOS, and ITOS. Then there’s the mid-term, where there’s a need to work to strengthen an ecosystem of industries so that the country is attracted to them so that their needs can be satisfied. And in between the short and medium term, I’d say it’s the technology companies. There’s already some investment in software development and startup companies. From our side, we haven’t yet started to produce specific policies for those companies. But this year, we will begin with an innovation fund, offering financial facilities for startup companies that want to work on innovation to receive specific support. I think this is an area where we need to dive in more.

The Ministry of Economy hasn’t yet gotten to the stage where we work closely with them and design policies specific to that sector. But we do see the opportunity, and it is our intention to, as I said in the midterm, speak about the next two years and be able to create actions and policies that cater to this specific sector, where we do see a lot of potential. Things are happening, but I think we need to create policies to speed up the development already happening in the country.

LATAM FDI: How does Guatemala’s participation in the Northern Triangle Regional Economic Development Strategy and El Salvador and Honduras create new opportunities for foreign investors?

Antonio Romerio: Well, first of all, streamlining commerce, facilitating commerce. That produces immediate results, and companies feel immediate, reducing the times in which products have passed through the different borders, which immediately reduces costs for companies and facilitates commerce. And there’s been intense work between the Guatemala, El Salvador, and Honduras governments to work around that. That’s one thing. There are also different regional initiatives, such as the master plan on mobility and logistics, which includes investments in airports, sports, and road infrastructure. There are opportunities to see the region as one market. This already happens, but there are still challenges in mobility, transportation, and customs facilities. Rebuilding those obstacles around those areas will multiply opportunities because you will have a market of around 50 million people in Central America. The connections to the different markets, the Atlantic and the Pacific ports, are already there. For example, the flow of products from El Salvador to the ports in Guatemala is very significant. So, as we continue to facilitate these countries’ integration, it will make the Central American market in Guatemala more attractive and make it easier for businesses to come from Guatemala.

LATAM FDI: Well, we’ve covered a significant amount of area in this relatively brief conversation that we’ve had over the last few minutes. One of the things that always comes up is that people who listen to our podcast typically have questions they come to me with. However, I would like to create an environment where they can speak directly to the person interviewed. Would you be willing to provide a means of communication so that people could contact you directly, whether through a LinkedIn page or an email address or maybe through an individual who is one of your aides?

Antonio Romerio: Sure, I could provide an email to one of my aides, and that would be a good way to establish contact. Well, you can email that to me later. I will place the transcript section on the web page that hosts this podcast. Just a quick question: Do you have a LinkedIn page as well?

Antonio Romerio: I have a personal one, but I haven’t worked on my vice minister one, so that’s still pending.

LATAM FDI: Okay, so we’ll leave it with the email address for one of your aides.

Antonio Romerio: Yes.

LATAM FDI: I want to thank you for joining me today. It’s exciting watching the developments in Guatemala. Hopefully, we’ll have a chance to talk in the future and discuss some things that have transpired since this day.

Antonio Romerio: Thank you. Thank you, Steve. My pleasure. Looking forward to that.

Juan Esteban Sanchez
Director 
Invest Guatemala
esanchez@investguatemala.org

LATAM FDI:  Today, Juan Esteban Sánchez, the executive director of Invest Guatemala, is with us. First, I want to welcome you to the podcast. Could you please tell us a little bit about yourself and your organization for our audience?

Juan Esteban Sanchez: Oh, hello, Steve. Thank you very much for this kind invitation. Yes, my name is Juan Esteban Sánchez. I am a Colombian guy just working to attract investment in  Guatemala. I’m an economist, but I also have almost four degrees in financial valuation. I worked in investment banking for nearly 10 to 15 years in Colombia. Then after, I became involved in the investment promotion agencies I was working for ProColumbia as a director of the offices of ProColumbia, the Commercial and Investment Bureau of Colombia in Guatemala, dealing with the bilateral relations between Colombia, El Salvador, Honduras, and Guatemala, but also Belize. Then after, I managed the ProColumbia office in Mexico for two years, one really important market. My last work in ProColumbia was working in India for almost five years, in the business relationship between Colombia, India, and the MENA region, the Arabic countries. After that, I came back to Guatemala, where I married a beautiful lady, and I’m now working as the executive director of the country’s private investment promotional agency, Invest Guatemala.

LATAM FDI: Well, let’s get into some information about investment in Guatemala from the perspective of foreign investors. What are the key advantages of Guatemala compared to the other countries in the region?

Juan Esteban Sanchez: To answer your first question, Invest Guatemala is a private institution that is the umbrella of an initiative that you can call the 2032 vision of Guatemala. It was created by the private sector and is called Guatemala Moving Forward. We, Steve, work at six working tables that try to improve the conditions for foreign companies just to come here to invest in Guatemala. Then, after these six working tables, they are related to human capital conditions, infrastructure, tourism, and agroimpact. It’s named after it. And the more important one is legal certainty. So, in this regard, I aim to create more good quality jobs here. Guatemala has excellent conditions for foreign investors at these levels. The first one is macroeconomic stability. I’ve been working in a promotional agency in the past; you can say that all the countries, Steve, many say that their government has real macroeconomic stability. But Guatemala, for sure, is one of them. The growth in Guatemala has been going on for almost 10 years in a row. We’ve been just growing at nearly 3.5 % in real terms.

The second one is that the exchange rate in Guatemala has been stable for almost 20 years, at around 7.5 quetzales per dollar. It is important to do business with that country for exportation, importation, and even domestic sales. The other one is that Guatemala has been working to create good conditions economic relations other countries. Guatemala has around 15 free trade agreements and 19 reciprocal investment agreements with some interesting countries. Guatemala must be one of the only countries with good diplomatic and commercial relations with Taiwan. And this is important for some companies in the world. The other thing is that Guatemala is just going down the path to get the investment grade. Fitch, Moodys, and Standard & Poor say that Guatemala has the macroeconomic condition to get the investment rate. Still, we have to work on the institutional side of the business to motivate companies to invest in Guatemala. Reinforcement of the law, an investment law, etc. It’s important to highlight that the average age of the population in Guatemala is around 26 years.

This is important because we have a demographic bonus that we need to take advantage of to get companies to invest in Guatemala. It is important for the company that wants to do business here. Why? Because there is a loyal workforce, we also have a population that, in the future, will have new families, buy new homes, and ask for public services. And this is an excellent opportunity for companies that provide services to a population, especially here in Guatemala. The other thing is that it is attractive to invest in Guatemala because it is the northernmost country in Latin America before Mexico. And this is important. Why? Because of the nearshoring strategy that I believe you have been hearing about for the last 20 years, Steven. But what about the conditions to invest in Guatemala? We can create some excellent prospects regarding nearshoring to North America, including Mexico. Okay. Then, there is an interesting point: Guatemala has a significant power generation matrix from renewable sources. Guatemala’s generation power matrix currently generates 60 % of its power from renewable sources.

We have great opportunities for companies that want to invest in Guatemala to pursue excellent business ideas in solar, electric, and hydropower generation.

LATAM FDI: You mentioned Guatemala’s demographic advantages and geography. But what support does Guatemala give to foreign investors in terms of any tax incentives that may exist to create regulatory ease? What investment protection is there to invest in Guatemala?

Juan Esteban Sanchez: This depends on the sector you are in. But Generally, Guatemala has one of the most flexible tax systems in Latin America, Steve. If you want to create a company, that is relatively easy; maybe in one to two weeks, you can create your own company, even for a foreign investor seeking to invest in Guatemala. You can choose if you want to pay, for example, income tax or ISR. It’s ISR in the United States. But you can pay 7% over the total income or select 25 % over your operational gross profit. And this is important because you can choose, and you can play with the costs. But depending on the sector, we have a special regime where you can be a company and settle a plant. You can be in an economic free trade zone. We can say that, yes. You can import, process, and export your product without paying taxes here. So, if you are in a free trade zone here, you can import without paying any tariff from some countries, but also you can export, and then you are not obligated to pay the tax here.

But if you want to sell your product, I’m sorry for the name. For example, you have some excellent conditions for optimizing the VAT in the free trade zone. But again, it depends on the sector you are just working in when you invest in Guatemala. From some country, from some industry, Steve, I would like to tell you that I used to work in investment banking. I was evaluating some energy projects here. If you want to invest in a power generation company that produces less than 5 megawatts, You have zero tax for 10 years. And this is important.

LATAM FDI: That’s significant. You mentioned the demographics again. I’m going to go back to that.

Juan Estaban Sanchez: Yes, go ahead.

LATAM FDI: What does that mean regarding the workforce capabilities and the availability of skilled labor? What workforce can a foreign investor expect to find when seeking to invest in Guatemala?

Juan Esteban Sanchez: I say, Steve, that it’s always important to be optimistic but realistic. We have a challenge because we have tremendous competition from migration. The United States consumes a significant part of Guatemala’s workforce. We have a private and public institution called INTECAP. It’s imperative to have this, Steve. They prepare the people, the young generation, regarding technological skills. If you want to be a carpenter, you can receive training for ITECAP. It’s the base for our workforce. If you get a title from INTECAP, it may require a three-month educational period. In the United States, they are pleased to get these people because they know that people from INTECAP are a quality workforce. So, we have a competition there. We have a challenge in that through INTECAP and universities. We have to prepare the young generation to have the skills for the future needs of international companies that want to invest in Guatemala, and it could be a little bit romantic, Steve, that something important here in terms of the workforce is that these people do outstanding hard work.

They are also really loyal and believe in family. So, we can offer companies looking to invest in Guatemala some excellent conditions in terms of skill. They can stay here and transfer that to the company that is coming here. The other thing is that we may be a country of around 18.4 million people, and around 11 million people can work. So, we can bring many people to the companies there.

LATAM FDI: Well, that’s the human infrastructure. Physical infrastructure is essential to foreign investors as well. What infrastructure developments or improvements are currently happening in Guatemala that would interest foreign direct investors?

Esteban Sanchez: Yes. A month ago, Congress approved a new law on infrastructure. This allows us to create some excellent opportunities for foreign companies to invest in Guatemala to improve the roads, not only the main but also the rural ones. There will be plenty of opportunities for investors and sovereign or private equity funds next year. They can come here to finance new road projects. The other one is that we are trying to help the government create the conditions for the modernization of the airports. In Guatemala, there are only two international airports, one in the capital city and the other in Petén, which is in the far north and close to one of the more important tourist attractions, called Tical. It will be vital if we can work to modernize the small airports, even for local or domestic trips. And I believe there will be outstanding opportunities for the companies abroad to invest in Guatemala.

The other one is between this year and the following year, and we are talking about weeks of difference; we will have two main competitions to increase the power generation metrics here in Guatemala. And the other one is to improve the power transmission system. As a small number here, Steve, Guatemala needs around four 4,500 new kilometers of network to consume or transport the energy we will generate in the next five years. The other one, and I believe there will be some information shortly, is that we will open excellent ports opportunities. Remember that because we have an excellent relationship with Taiwan, we need an investor different from the Chinese. So, it’s a geopolitical opportunity to invest in Guatemala. This is important to know for the companies listening to this podcast.

LATAM FDI: Well, we’ve talked about human infrastructure; we just got through talking about physical infrastructure. Let’s talk about trade infrastructure. How is Guatemala positioned within the Central American region regarding trade agreements, access to regional markets, and logistics networks?

Juan Esteban Sanchez: Sure. Okay. Then again, you can hear Steve for all the investment promotion agencies (IPAs) in the world that my country has the best location. You can listen to that. But it is challenging to sell that point. Because of its proximity to global markets, Guatemala is on the border with Mexico. We are also the biggest economy in Central America, but we have a free trade agreement with all the Central American countries. However, we are also the main gate to some countries in the Caribbean. So, for a company that wants to invest in Guatemala, it is a huge opportunity because of location, tariffs, and proximity to the markets. Talking about our 15 free trade agreements, we can approach almost all the countries in the world. But seriously, the opportunity in terms of commerce is how you can create your company here in order not just to produce but to export to Mexico, the United States, and Canada. And we are working on that. When talking about the new administration of the United States, companies will have a massive opportunity to invest in Guatemala to change the supply from China to Asia, especially to give American companies a chance to have a close source.

To highlight, Steve, if you establish a company in Guatemala, your transit times in Miami may be around three days. But also, if you want to bring some products to Los Angeles, for example, that is excellent marketing here, there’s just seven days. Now, consider that you can export your products and then transport them by road because of the border with Mexico. Significant projects from the Pacific and the Atlantic will bring some train systems that can connect the train system of Mexico. It will be an excellent signal for the investor.

LATAM FDI: Well, as with most podcasts, I have the pleasure of speaking to very interesting and informative people; we’ve covered a lot of information in a relatively short time. Experience has shown in the past that listeners to the podcast often have questions that are related to what they’ve heard. I want to ask participants in the podcast if they would make themselves available to any listeners for questions they might have. Could you share your email address? Could you have their LinkedIn profile on the web page on which the podcast sits? Can people with a desire for more information get in contact with you?

Juan Esteban Sanchez: Absolutely. It would be great to hear what the people are looking for about investing in Guatemala. Remember that, Steve, that through the free trade agreement, we are just capable of bringing some products to almost 1.5 billion consumers in the world. Especially if anyone is interested looking to invest in Guatemala, we are working to increase the opportunities in agribusiness, packaging, BPOs, and pharmaceuticals. Well, pharmaceuticals are very difficult. We will be more than interested in answering and giving the information to any investor who wants us to see Guatemala as a big opportunity. I don’t know if you want me to bring some information about my email or something.

LATAM FDI: Well, what I can do, which I’ll do for expedience, is put a link to your LinkedIn profile on the podcast page in the transcript section.

Juan Esteban Sanchez: Great.

LATAM FDI: I’ll include your email address and a link to Invest Guatemala. Would that be okay?

Juan Esteban Sanchez: It would be great, please.

LATAM FDI: Well, speaking with you today has been a great pleasure. I’ve learned a lot, and I’m sure that people who listen to this podcast will also learn a lot. Thank you for taking part in this discussion.

Juan Esteban Sanchez: Thank you very much, Steve. I’m looking forward to another opportunity to discuss this in the future.

LATAM FDI: Of course. Thank you.

Juan Esteban Sanchez: Thank you very much.