Ebell de Castro
General Manager
Punta Cana Free Trade Zone
Punta Cana, Dominican Republic
edecastro@puntacanafreezone.com

LATAM FDI: We have Abel de Castro with us today. Abel, how are you?

Ebel de Castro: Hello, Steven, I’m very fine, thank you. Very pleased and very happy to be here with you today.

LATAM FDI: Well, I’m glad you are with me as well. I always like to ask the people that I interview to start by telling us a little bit about their background and about their organization.

Ebell de Castro: Thank you, Steven. First of all, I am passionate about free zones and foreign investment. I have been working in the free zones of the Dominican Republic for over 20 years, since I was 18. So, my career started at the National Free Zones Council, which, as you may know, is the main government body in the Dominican Republic responsible for promoting and regulating free zones. There, I had the opportunity to work with several multinational corporations on interesting investment projects, including a greenfield investment in the DR. From there, I worked as a general manager at Nigua Free Zone, a private free zone park in the Dominican Republic. There, I had the chance to be involved in an expansion project aimed at increasing the park’s size by 3. And after spending 6 years, 5 years, almost 6 years as general manager of the Nigua Free Zone, I received an offer to serve as general manager of the Punta Cana Free Trade Zone, a new and unique free trade zone in the Dominican Republic.

It is an initiative of Grupo Punta Cana, which, as you may have heard, is one of the main economic groups in the Dominican Republic, a corporation with more than 22 companies that were initially well known worldwide for developing Punta Cana as a global tourist destination. So now, you know, taking into account all these experiences, all this development, and all these externalities that have emerged in Punta Cana, the group established the Punta Cana Free Trade Zone, which is the park where I am pleased to work now as general manager.

LATAM FDI: Well, thank you for that background information. I’ve got a few questions to ask you today. And the first one is: what makes the Dominican Republic an attractive destination for international companies looking to expand?

Ebel de Castro: Well, I think that the Dominican Republic has developed remarkable competitive advantages over the years. But I think that the main, uh, the main— I would say the main incentive, the main positioning that the Dominican Republic has to show to the world for free zones development and for attracting foreign investments into the free zones. It is the economic incentive packages that I believe are the most competitive in the region, you know. First, this incentive scheme exempts companies from 100% of all national and local taxes for 15 years, and the exemption can be renewed as long as the companies contribute to job creation, foreign currency generation, and technology transfer. These incentives would remain in place. And together with this, I think that it is important to mention the economic and political stability that the Dominican Republic has, you know, enjoyed. For the last 50 or 60 years, we have been living in a democracy. We have had elections for 60 years, with new presidents every 4 years. We have a government that is an ally of the private sector. It is a pro-business government.

So, I think this has been key, Steven, for positioning the country as a solid option, a solid alternative for foreign investors.

LATAM FDI: You touched upon this a little bit, but maybe we could go into a bit more detail. For a company that is considering investing in the DR, what are the key factors you think they should evaluate before making a decision whether or not to start operations there?

Ebel de Castro: Well, I think one of the main things that is very appealing to investors, manufacturers, and logistics operators who will work in the global marketplace is logistics and connectivity. The DR has a network of 9 international airports and 11 ports. You know, in different years, according to the Global Competitiveness Report, the Dominican Republic has been ranked as the Latin American country with the best-quality transport infrastructure. So, in addition to this, we should take into account that we have great connectivity. For example, just to mention one case: at Punta Cana International Airport, we handle approximately 900 flights per week and serve 85 destinations directly from there. So, you can fly from Punta Cana, or you can send cargo from Punta Cana, from any other place through Punta Cana, and you will have the cargo in the final destination in less than one day. We offer direct flights across Europe, including Poland and Finland, and we fly to 17 Canadian cities daily.

So, you know, these are advantages that not a lot of countries have. Other very important elements are the strong network of industrial parks we have in the DR. We have almost 100 industrial free zone parks, located all over the country, especially in areas with high-quality labor and airports and international ports, as I mentioned earlier. And most of all, we have a very cost-competitive economy. We have very attractive labor costs, which are currently, on average, competitive with those of Asian countries like China. So, you know, the idea that we are more expensive than Asian countries is not necessarily true. I think that it is another advantage that a new investor should take into account.

Well, I think that currently we’re seeing something very, very interesting. For example, you know that in the past, maybe 90% of the workers in the free zones were basic operators. Now let’s say 60% of all the workers that we have are operators and 40% are technicians. This means we are increasing the value of the products we manufacture and export. So that is, I think, great news because, you remember, Steven, in the past most of the products that we used to manufacture were apparel and very basic assemblies, right? Right now, we are competing in the manufacturing of medical devices and high-value electronic components, and, you know, this definitely says a lot about how we have learned, how we have gained expertise, and especially that we are competing in these segments with advanced countries. But now we are seeing the beginning of new industries like aviation, like aerospace, which is what we are trying to develop at the Punta Cana Free Trade Zone.

LATAM FDI: For those who may not be familiar with it, your free zone, the Punta Cana Free Trade Zone, how does it fit in with the country’s economy? How does it fit in with the logistics system? Can you fill me in on that?

Ebell de Castro: Yes, well, first of all, Steven, the Punta Cana Free Trade Zone is the first industrial and logistics park located within an international airport in this region. You have other business parks within airports and around nearby airports, but this is located inside the Punta Cana International Airport. This means a lot for logistics. Just, just think that manufacturers that establish themselves in the Punta Cana Free Trade Zone, logistic operators that establish operations in the Punta Cana Free Trade Zone, can move their goods from their warehouses to the cargo terminal in less than 5 minutes. The air cargo terminal, which we call the Air Cargo Hub, is located within the free zone park. All products that the Dominican Republic exports through the Punta Cana International Airport, or that are important to the Punta Cana International Airport, or cargo that goes in transit through the Punta Cana Airport, you know, has to go to the free zone first. But remember, the free zone is inside the airport. We think this aligns well with the Dominican Republic’s goal of becoming a regional logistics hub.

But also, companies that move their goods by air, as I mentioned earlier, have the great advantage of an airport in their backyard.

Ebell de Castro: Well, you mentioned just now the aviation component. You talked about MRO maintenance of aircraft. Why is this relevant to the Dominican Republic region in general?

Ebel de Castro: Well, you know, the MRO, the maintenance of aircraft, is a new industry in the Dominican Republic. It is important to mention that there are several different subzones within the Punta Cana Free Trade Zone. One of them is the Logistics Zone, the Logistics Center Zone. Another zone is the Manufacturing Center, where we will manufacture products that will be transported primarily by air, such as medicines, pharmaceuticals, jewelry, and high-value electronics. There is another, which is the MRO, the maintenance, repair, and overhaul. So the idea is to have, you know, in an area of the park with access to the airport, a hangar currently operated by FL Technics, one of the world’s largest providers of maintenance services. This company will create approximately 1,000 specialized jobs, Steven. But think about the demand that this company will have for aerospace components and engineering services. This creates a new labor market in the Dominican Republic for people who are prepared and capable of working in the aviation industry. In both manufacturing and services, because this MRO has, you know, also some areas where they also manufacture a few of the components that they use for their services.

LATAM FDI: What’s the long-term vision for your Punta Cana Free Zone, and what types of companies are you looking to attract to it? You touched on this question a bit, but could you be more detailed?

Ebell de Castro: Of course. Well, first, our target— what are we attracting? First, companies related to the aerospace and aviation industries, and the manufacturing industries in general. This is maintenance, repair, and overhaul (MRO). All aviation activities related to maintenance and manufacturing. Services are also part of the target that we are attracting. The second one, the second very important target is value-added logistics services. As I mentioned earlier, we have a logistics center within the park, and there we are promoting the establishment of distribution centers. And you can think about, for example, companies that work in the fast fashion industry. We are, for example, promoting the establishment of companies that will import garments and luxury goods into these warehouses. Here, they will provide added-value logistics services such as packaging, labeling, and similar activities. And from there, they will distribute these products to all their stores and distribution centers throughout the whole region. And the third target that we have is the manufacturers of goods that are mainly transported by air. This includes aviation components, jewelry, pharmaceutical goods, and many others.

So, what is our vision right now? While we are training workers in the aviation industry who are gaining skills for, if you know, for, for, for their— and in the airspace industry in general, we believe that in the long term, let’s say in 15 years to 20 years, we could be manufacturing aircraft in the Dominican Republic in the Punta Cana Free Trade Zone. That is the vision, Steven: assembling an aerospace cluster within the Punta Cana Free Trade Zone that would be the first of its kind in the Caribbean.

LATAM FDI: That sounds very interesting. One thing that’s consistent about these podcasts is that listeners often want to ask further questions to the people who participate in them. So, I’m wondering: if someone who hears this wants to get in touch with you, how would they go about it?

Ebell de Castro: Well, I would be more than happy, you know, to explain, to present our value proposition to any of our— any of the people that are part of the audience. Anyone can email me at the personal email listed at the top of the transcript page. Additionally, they can visit our website and fill out the contact form. And our website is www.puntacanafreezone.com.

LATAM FDI: What I’ll do as well is, at the top of the transcript of our discussion, I’ll put your LinkedIn profile, if that’s okay, your email, of course, your email, and the links that you just mentioned.

Ebell de Castro: Perfect.

LATAM FDI: Well, I want to thank you for being with me today. It’s very interesting what’s going on in the Dominican Republic, and I wish you a lot of success.

Ebell de Castro: Thank you very much, Steven. I really appreciate the opportunity of talking with you and your audience.

LATAM FDI: Have a great day.

Ebell de Castro: You too, Steven. Goodbye.

John Bozek
Chief Strategy Officer
Invest Puerto Rico
jbozek@investpr.org

LATAM FDI: Hello, welcome to another episode of LATAM FDI’s podcast. In these recordings, uh, we talk to people in Latin America about topics related to foreign direct investment, or FDI. Today, we have John Bosek with us. John is with an organization called Invest Puerto Rico. John, can you tell us a little bit about yourself and your organization?

John Bozek: Sure. Thank you, Steven. So, as you mentioned, my name is John Bosak. I’m the Chief Strategy and Research Officer at Invest Puerto Rico. I’m an economist with a background in economic development, both here on the island and in New York. Invest Puerto Rico is the island’s investment promotion agency. So, we are not a government agency, but we work closely with the government to promote Puerto Rico and to attract foreign direct investment, you know, job growth, companies that are interested in coming to the island. And I’ve been working with Invest Puerto Rico for about 7 years now.

LATAM FDI: Okay, John. Well, I have a series of questions about your activities with Invest Puerto Rico that I hope the listeners will find interesting. First, let me start off with the first one. Puerto Rico has undergone some significant economic shifts in recent years, especially following the debt crisis and Hurricane Maria. How would you describe the island’s economic recovery today, and what sectors are currently driving the most growth?

John Bozek: Sure. So, as you mentioned, you know, we have had a public debt crisis. It’s been, it’s been going on for a while now. A lot of that was tied to the government maintaining spending in the early 2000s. When tax revenues weren’t keeping up with spending. They were borrowing to fund OPEX rather than capital improvements, which is not acceptable. But over the last few years, we’ve been coming out of that crisis and getting the government’s financial house in order. Meanwhile, as you mentioned, you know, we did have a hurricane, a major hurricane, a 100-year storm back in 2017, so almost 10 years ago now. You know, the island is, you know, recovered from the storm. We have been for probably 7 or 8 years now, but there are still some lingering effects. There was a population decline as a result of the storm, and our Power infrastructure, which was already not in the greatest shape, also suffered. Power infrastructure on the island has been slow to rebuild. That said, there are bright spots in the economy. Puerto Rico is the number one manufacturer of pharmaceutical products in the United States.

Puerto Rico is a U.S. territory, and we’re also a leading producer of medical devices. We’re the world’s leading pacemaker manufacturer. The majority of disposable contact lenses in the US are produced in Puerto Rico. You know, we have, you know, again, one of the largest pharmaceutical manufacturing bases in the US. Our unemployment rate is currently at one of the lowest levels in the island’s history, since we started recording it. It’s still a little bit above the U.S. unemployment rate. It’s around 5-5.5% here on the islands. But that’s compared to the rest of the Caribbean, you know, where there’s a lot of informal economic activity. Our unemployment rate is currently at a historic low. And tourism numbers have been at record levels, really, since the pandemic. And that’s due to several factors. One, we’ve— back in around 2020, the tourism marketing was outsourced from the government to a destination marketing organization, and they were really aggressive in attracting additional tourism dollars to the island. Also, the boom in Airbnb and, you know, shared— how do they call that— short-term rental housing.

You know, it kind of took the lid off the hotel room limits we’ve had, which limited our tourism levels and increased the number of rooms available. So, that really helped our tourism sector. And then, because of the pandemic, people couldn’t travel internationally, but Puerto Rico is—again, you don’t need a passport if you’re a US citizen. So, many people chose to come to the island during that time. And also, we’ve had, you know, one of the largest musical acts in the world in the last few years. Bad Bunny has also attracted significant musical tourism to the island. So that’s a bright spot. We’ve determined at Invest Puerto Rico that manufacturing remains the strongest driver of our economy. It represents about 45% of our GDP, which is very high, you know, compared to the rest of the world and compared to the rest of LATAM. And a lot of times people think, you know, a Caribbean island, beautiful beaches, you know, that tourism would be either the main driver or one of the main drivers, but it only really represents about 7-8% of Puerto Rico’s GDP.

LATAM FDI: Well, you mentioned manufacturing. In light of that, how is Puerto Rico positioning itself today to compete globally? This is especially relevant in light of nearshoring trends and supply chain realignment that’s affecting the United States.

John Bozek: Sure. Since the pandemic and the tariff situation over the past year and a half, Puerto Rico has been seen as a lower-cost U.S. jurisdiction for high-value-added products. And, you know, the main ones, as I mentioned earlier, are pharmaceuticals and medical devices. You know, another sector is the aerospace industry. Aerospace design and engineering, and aerospace manufacturing. And, you know, we’ve really seen ever since the supply chain crisis around the pandemic, and again, the tariff situations, you know, we are U.S. territory. So, there are no tariffs. You know, obviously, there are tariffs on importing raw materials from other nations that we need to use to manufacture and add value to. But when we, you know, ship back to the US, there are no tariffs. So a lot of multinational companies that already had operations on the island, such as Amgen, Eli Lilly, Raytheon, and others, you know, when they were looking at their global supply chains in light of what’s been happening in the last few years, You know, instead of expanding in, you know, maybe European production or production in Asia, they’ve decided to do production in Puerto Rico.

And you know, Invest Puerto Rico promotes the numerous advantages of that. One, as I said before, we’re in a US jurisdiction, so you know, US federal law, FDA regulation, and inspections govern activities. So that’s important for pharmaceuticals. Anything that has to do with the Department of Defense or the Department of War spending, you know, we’re US citizens, US federal law again. So, you know, that gives us an advantage over foreign jurisdictions. Also, our cost structure is advantageous. Salaries on the island in some of these key sectors are generally, you know, it depends on what you’re talking about, but generally 20 to 30% lower than mainland salaries. Mainland US salaries. So, in our manufacturing sector, we have highly skilled engineers and technical workers. And the cost that, you know, the cost on the labor side is going to be lower than some of our competition, say, in Connecticut or California or Colorado or some of these other states that also have large aerospace sectors or pharmaceutical sectors. And then lastly, you know, we’ve had— since we’re a US territory, we’re not subject to federal taxation. So, we can offer some of the most attractive tax incentives, you know.

So basically, for manufacturing, it’s 0% corporate income tax on the federal side and 4% on the local side. So that’s very attractive for these large manufacturing facilities. And then for export of services, and that could be any type of service, software development, design, and engineering, as I mentioned, in aerospace, for example, any export of service from Puerto Rico, so an economic activity done from the island but serving somewhere else, either in the mainland US or another country, that economic activity is only taxed at 4%. We, at Invest Puerto Rico, explain that these are attractive tax incentives where, when you add everything else: the labor costs, US jurisdiction, you know, strategically located in the Caribbean, you know, it’s a pretty attractive package that we’ve been able to offer. And we’ve seen some of the results of Eli Lilly’s recent reshoring efforts: at the end of last year, it announced a $1.2 billion investment in a drug manufacturing facility. For example, Collins Aerospace recently announced a major expansion of one of its facilities on the island. We recently had a solar plant and panel manufacturer announce a large project in Aguadilla, Puerto Rico.

We’ve seen a lot of manufacturing activity being reshored to the island over the last year or so. So, it’s positive information. This is positive news in that sense.

LATAM FDI: You mentioned the availability of engineers for some industries in Puerto Rico. But in terms of workforce in general, what steps does Puerto Rico take to attract, retain, and upscale talent, particularly in the high-value industries that you just alluded to?

John Bozek: Sure. And that’s actually one of our main challenges: retaining the workforce. You know, Puerto Rico is a fairly small island. We’re about 100 miles wide by about 35 miles north-south, and we have about 3— a little more than 3 million people, 3.1, 3.2 million people. But because we’re US citizens, a lot of times young people go to university in the US and then they stay, or they, they get a job, their first job in the US, and they stay in the US, um, or they move to the US, you know, looking for— especially outside of the metro area of San Juan, Maybe there’s not as many well-paid job opportunities in the rest of the island. So, you know, they might move to the US, and a lot of times, they move to the US thinking that they’re going to come back to the island, but they may end up getting married or buying a house or pursuing their careers in Florida or in New York or Connecticut, and maybe not coming back to the island. So, it is a challenge.

And, you know, what we’ve been doing in terms of workforce development the last few years is— and I think this is a strategy that other economic development organizations, such as Invest Puerto Rico and, you know, related universities, academia, etc., and other places in the U.S. and in the world are also doing. But we’ve been focusing on maybe not 4-year degrees, but stackable skills development. So, these are things that could be in the tech sector. It could be software development skills or AI skills, things that you don’t need a full 4-year degree for. Maybe you can attend a 3- or 6-month program at the university. You know, in the pharmaceutical sector, for example, you know, maybe we don’t need full engineers for every single role. Maybe it’s just a technician, technical skills. And that could be, you know, maybe a 6-month program or an 8-month program, you know, working with some of the local colleges. We’ve been really trying to shift to match the jobs that are available and, you know, the talent that the island has to offer to make sure that those things are kind of lining up.

But it remains a challenge. You know, our construction sector, for example, faces workforce shortages. And a lot of that has to do with, you know, our construction and our construction work is very concentrated post the hurricane on rebuilding efforts. So, when some of the large construction contractors are fully dedicated to those federally funded rebuilding projects. So, for other types of projects, such as a new housing or manufacturing facility, it might be difficult to find construction workers. We have seen some issues that are not very different from those of other island economies in terms of, you know, retaining the talent we need for economic development.

LATAM FDI: You talked a little bit about the fact that you don’t have to pay federal tax. In Puerto Rico, other incentives have been put in place to attract investors and entrepreneurs. Could you tell us a little bit about Act 60, how it has been implemented, and what kind of long-term impact you think it will have?

John Bozek: Sure. Act 60 consolidated all the tax incentives created over the years in Puerto Rico, whether for manufacturing, research and development, the export of services, or tourism, and put them under one code. It really kind of, you know, there were tax incentives on the books that dated back to the 1950s and ’60s. So, Act 60, enacted in 2017, was an effort by the legislature and the Department of Economic Development here on the island to organize and consolidate all of those things under one umbrella. Act 60 is divided into different incentives we offer and by sector. As I mentioned earlier, there are tax incentives for manufacturing. There are tax incentives for exporting services. There are tax incentives for tourism-type activities. There are also tax incentives for research and development. There are tax credits available for research and development, which is very important for our pharmaceutical, aerospace, and medical device sectors. And then there’s also an incentive for individual investors, which is kind of one of the most controversial parts of Act 60.

And, you know, there are people who are kind of maybe opposed to it, but there are also people who support it. And that is really aimed at bringing investors and high-net-worth individuals to the island. And again, because we’re not subject to U.S. federal tax, you know, and that’s also on the personal income side, we’re able to offer, for example, 0% tax on capital gains, 0% tax on dividends. So that’s very attractive for, for, you know, people who, who maybe live off of their, their investments. So, you know, since that law was put on the books back in 2012, we have seen an influx of, you know, high-net-worth individuals, mostly from high-tax jurisdictions in the U.S., who come to Puerto Rico. You know, a lot of them live in luxury developments on the beach. And, you know, there have been some positive effects of that tax incentive. Especially in the real estate sector. And then also a lot of those individuals are also pretty entrepreneurial. They’ve started businesses here on the island and hired locally, including in the tech sector. So that’s one of the more controversial parts of Act 60.

But you know, in net terms, I think the particular chapter on individual investors has been positive as well.

LATAM FDI: Looking ahead, what in your opinion are the most promising opportunities for economic development, let’s say, in the next 5 to 10 years?

John Bozek: So, one, you know, I think we— Puerto Rico is already recognized, especially in the life sciences sector, as a leader. You know, we have the talent, we have the facilities, we have the history. Of being able to, you know, 60 years, 70 years of history in terms of, you know, life science manufacturing. At Invest Puerto Rico, we believe we will continue to be a leader there moving forward. And, you know, the government locally here is dedicated to putting, you know, policies in place to keep that moving because it is such a large part of our economy. I do think that there are opportunities in the future, especially around our growing aerospace sector. You know, we have some big names already operating on the island: Pratt & Whitney, Lufthansa, Lockheed Martin, Raytheon, RTX. That sector, you know, 10, 15 years ago didn’t really exist, but it’s grown kind of exponentially, and I continue to see that sector growing here on the island. And then, you know, as our tourism sector matures, you know, because we’ve been so focused on manufacturing for the last, you know, few decades, you know, we haven’t focused as much on tourism as some other Caribbean islands, you know, maybe like the Dominican Republic or Jamaica.

I think there’s a lot of opportunity to kind of take advantage of the positive headwinds in terms of tourism growth to make that sector more mature going forward. So those are some positive things and opportunities that I think we’ll continue to capitalize on moving forward. The last thing I’ll say, you know, as a center for logistics, you know, we are one of the largest— we have one of the largest cargo and passenger airports in the Caribbean here in San Juan. And we also have one of the most active maritime ports. We are experts at shipping, importing, and exporting highly sensitive materials for our pharmaceutical and medical device sectors, so our logistics sector is, you know, highly skilled and fairly advanced. I see that being a regional logistics player and a logistics hub as another positive development over the last few years, and I expect it to continue over the next 5 to 10 years as well.

LATAM FDI: Well, those are the opportunities. I’m sure there are some challenges that you at Invest Puerto Rico see as well. And what are those? John Bozek: So, you know, as I already mentioned, demographics is a challenge here on the island. You know, we have about 3.2 million people. You know, in the early 2000s, we had about 3.6 million. We’ve lost population. A lot of that had to do with the hurricane in 2017. But we’ve also had, you know, low birth rates, not unlike those in some other jurisdictions in Europe and the US. But you know, on top of that, because you know, anybody, any citizen of Puerto Rico can move to the US freely back and forth, you know, it’s harder to keep a brain drain from happening. So that’s always an issue here on the island. The second big issue that most people talk about here on the island is the cost and reliability of energy. With any island economy, that’s an issue. You know, Hawaii has similar issues. You know, other Caribbean nations have similar issues, but our power, you know, our power grid is, and continues to be a liability. We have to find innovative solutions to address some power grid issues.

For me, those are the two big, big challenges Puerto Rico faces.to remain competitive in terms of economic development, according to Invest Puerto Rico.

LATAM  FDI: John, we’ve covered quite a bit of material in the last 20 minutes or so. I make the people I interview available to answer any questions listeners might have. If somebody has a question for you. How would they go about communicating with you to answer those questions?

John Bozek: Sure, um, I’d invite any of your listeners to look me up on LinkedIn, John Bozek, B-O-Z-E-K, at Invest Puerto Rico, or they could always send me an email, which is jbozek@investpr.org. My first initial and then my last name at investpr.org. And I welcome any questions from your audience.

LATAM FDI: Okay, we’ll put your LinkedIn profile on the transcript page of this particular interview, and we’ll make sure that your email address is there prominently as well. And I want to thank you for speaking with me today about Puerto Rico. You know, I, I, it’s funny, a lot of people, including myself, when you think of Latin America, you don’t necessarily include Puerto Rico in it because it’s part of the United States. But, you know, it’s, it is a Latin American entity.

John Bozek: Yeah, that is an issue. There is an awareness issue in Puerto Rico as well. For that very reason. You know, a lot of times we don’t show up in economic analyses of the US because we’re not a state, and we don’t show up in economic analyses of LATAM or the Caribbean because we’re not a country. We kind of fall into a kind of middle area. But yes, we are very much a Latin American country. You know, Spanish is the first language, but we’re also very much part of the US. Anybody who visits the island can kind of feel both cultures, you know, the positives of both cultures. So that’s one of the ways we like to position ourselves.

LATAM FDI: Well, thanks again for joining me today, and good luck as you invest with your organization and find investors to set up shop in Puerto Rico.

John Bozek: Thank you. It’s been a pleasure.

FDI inflows in Mexico and Central America rebounded 30% to 42 billion dollars

The largest economy in the region, Mexico, recorded an increase in FDI of only 13%, to 32 billion dollars.  This made the country the second largest recipient in the subregion, behind Brazil.

However, the number of FDI greenfield projects announced in the country, an indicator of future investment plans, increased by 43% compared to 2020.

The greatest leap occurred in information and communication technologies. The Chinese giant Huawei, for example, announced that it would open a $4.5 billion cloud data center in Mexico.

With new investments in special economic zones, foreign direct investment to Costa Rica returned to pre-pandemic levels, nearly doubling to $3.2 billion.

In Guatemala, FDI reached a record level of 3.5 billion dollars.

FDI in the Caribbean increased by 39% to 3.8 billion dollars

The growth of external investment drove the rebound in FDI in the Caribbean economies. The Dominican Republic was the largest recipient of foreign direct investment to the region.

The island country saw its FDI increase by 21% to 3.1 billion dollars. Flows increased in mining, financial services, and special economic zones that contain manufacturing plants.

Main FDI trends by sector in the region

The Latin American and Caribbean region saw a general increase in cross-border mergers and acquisitions. Although the number increased by 49% to 244 operations, the total value of net sales (8 billion dollars) was practically unchanged from the previous year.

The services sector posted the largest increase in net sales, up 12%, to $6.4 billion, mainly in the financial and energy supply industries.

Announced regional investments increased by 16%, with most commitments going to the automotive, information and communication, and extractive industries.

The value of international project financing deals announced in the region doubled, exceeding pre-pandemic levels. Large transport infrastructure projects, especially in Brazil, and mining and renewable energy activities throughout the region were the biggest contributors to this rebound in levels of foreign direct investment.

Juan Carlos Zapata
Executive Director
FUNDESA
jczapata@fundesa.org.gt

LATAM FDI: Hello, today we have with us, Juan Carlos Zapata. Juan Carlos is the executive director of FUNDESA, a Guatemalan organization. Juan Carlos, nice to see you. How are you?

Juan Carlos Zapata: Thank you, Steven. Very nice to be here, and thank you for the opportunity.

LATAM FDI: Could you tell us a little bit about yourself and your organization?

Juan Carlos Zapata: Well, I’m the executive director of FUNDESA. FUNDESA is the Foundation for the Development of Guatemala. We’re a private nonprofit think tank. We are comprised of businesspeople in their personal capacity, and we work on competitiveness issues to increase productivity in Guatemala, enhance the country’s ability to attract more foreign direct investment, and generate more jobs and employment opportunities. And to do so, we work with various groups from both the public and private sectors to advocate for increased investment in infrastructure, human capital, and the rule of law.

LATAM FDI: Well, now that you’ve explained what role the FUNDESA plays in Guatemala’s economic development, tell us a little bit about the macroeconomic situation in Guatemala today.

Juan Carlos Zapata: Well, Guatemala is one of the most stable countries when you talk about the macroeconomic stability of countries in Latin America. When you look at the exchange rate of the quetzal, our currency, it’s been around 780 quetzales per dollar.  When you see the different credit rating agencies, Fitch, Moody’s, and Standard & Poor’s, we are one notch below investment grade. It has improved over the past 20 years. Macroeconomic stability in Guatemala grew by 4.3% last year. There has been an effort from both the public and private sectors to attract more foreign direct investment and generate more investment opportunities in Guatemala. So, we think that our macroeconomic stability is one of the key assets of the country in order just to— when you talk about how to attract more foreign direct investment in Guatemala.

LATAM FDI: You’ve mentioned before that FUNDESA is involved with an effort called Guatemala Moving Forward. Could you tell us what that is?

Juan Carlos Zapata: Yes, after the COVID pandemic, we began to understand the shifts in different purchases and how Guatemala could apply them to increase nearshoring and take advantage of the nearshoring opportunities we saw worldwide. So, we subcontracted with the international consulting firm McKinsey to help us understand where we could improve across our various challenges and how to better approach foreign direct investment. Even though foreign direct investment has been growing, it’s still below 2% of GDP. When you look at other countries in Latin America, you see that Costa Rica, for example, they attract almost 5% of its GDP in foreign direct investment. The Dominican Republic is close to 6%. We understood that we still have some bottlenecks in order to attract more foreign direct investment. Through the initiative Guatemala Moving Forward, we began forming working groups. We have a working group on foreign direct investment. We established a national organization, Invest  Guatemala, funded by the private sector, to develop a greater understanding of how to increase foreign direct investment in the country, follow up on leads for new foreign direct investment, and work with companies interested in Guatemala.

We’re also looking at infrastructure projects, so Fundesa has started developing a strategy to approve an infrastructure road bill. We also modernized the PPP law, working with Congress, so that all projects no longer had to go to Congress for approval. We’re also working on a port system law that is still pending in Congress, but we think it could be approved this year. These working groups for infrastructure, human capital, and rule of law all have businesspeople working together with both public and private organizations, trying to understand where the bottlenecks are, which are the key aspects that we have to move in order for Guatemala to keep on growing its economy and increasing its foreign direct investment.

LATAM FDI: One of the things, as you well know, today, is that, in terms of competitiveness, digitalization plays a significant role.

Juan Carlos Zapata: Yes.

Latam FDI: What’s happening in that regard in Guatemala?

Juan Carlos Zapata: So, in the aspect of rule of law, one of the key drivers of how to increase rule of law is through digitalization, specifically to have a 100% digitalized state, which, of course, is going to be a very important challenge for a country like Guatemala. We still have very weak institutions. Our institutional capacity is very low compared to others, even compared to other Latin American countries. So, one key aspect of the agreement to reduce taxes on exports to the US was that Guatemala had to be 100% digitized. That is, of course, a medium and long-term objective. We think it could be achieved in the next 5 to 10 years, depending on how quickly it moves. But Fundesa is working very closely, looking at what has happened in other Latin American countries like Chile, Uruguay, and Colombia, which also have a digitalization agenda within the public sector. Because when you look at the private sector, most companies are very digital and very competitive. But in the public sector, there’s still a lot of effort required to shift people’s mindset from paper to digital.

Right now, Fundesa is working very closely with the Ministry of Economy. They have a working group collaborating with the Ministry of Environment, the Agriculture Ministry, and the Health Ministry to digitize all processes to enable businesses to open and operate in the country.

LATAM FDI: Well, you mentioned earlier, too, that some things are happening with regard to public-private organizations, PPP reform, and change. Yes, you mentioned that. Could you tell us how that relates to your investment landscape?

Juan Carlos Zapata: Well, Guatemala only has one project, a PPP infrastructure project. It’s a road that connects Escuintla with Puerto Quetzal. That was the first project approved by the PPP law. But since projects had to go to Congress for approval, it took too long to get them approved. This road had been pending approval in Congress for almost 3 and a half years before it was even approved. So that, of course, delays and increased costs for different operations within the infrastructure sector. So, one of the reforms we have been very successful in changing is opening businesses and creating opportunities in Guatemala by reforming the PPP law so projects don’t go to Congress. That was approved last year, and it’s being implemented this year. We are supporting the Infrastructure Associate, the National Associate Agency, which is the ANI, the National Infrastructure Agency. They are the organizations responsible for public-private partnerships here in the country. Fundesa is working with them to comply with all regulations and the rulebook for this law to secure more projects in the coming years.

We have to bear in mind that elections in Guatemala will be next year, so that will also be a key aspect for all the political parties presenting their candidates starting in January. We understand that that’s going to be one of the most important challenges, because when you look at infrastructure in Guatemala, both the quantity and quality of roads have to improve. Just to have a number, Guatemala has 1 meter of roads per person. If you go to El Salvador, the roads are up to 2 meters wide. Go to Costa Rica, it’s almost 8. Mexico is 6. The US has 20 meters of road per person. So, we do need more investment in roads across the country to connect ports and cities, and to increase the number of airports. And ports we have in the country to increase our competitiveness.

LATAM FDI: Well, you’ve had some success recently. I, I read about, I believe, Yazaki. Is that correct?

Juan Carlos Zapata: Yes, they— yes, Yazaki is a Japanese auto parts company. They are a Japanese company based in North America. They’re the primary offices of that investment are in the U.S., and they have operations in Mexico and other Central American countries. But they opened their first factory here around 2020-2021, and they’re opening another factory starting next year. We think that the vehicle and auto parts harnesses are a very good sector for Guatemala to attract foreign direct investment, as they easily connect to the supply chain in Mexico and then export to the US.

LATAM FDI: Are there any other sectors that you see some possibilities in?

Juan Carlos Zapata: Yes, everything that has to do with agro-industry and manufacturing within the agro-industry sector. Of course, Guatemala is very important, and its textile industry is also a key sector that attracts significant foreign direct investment. But the other sector that has been growing, it’s very interesting, is the banking and financial system. When you look at foreign direct investment, more than 43% of the total that came into Guatemala last year came from the financial and banking sector. And that’s because we not only have more international banks now, but also more fintechs coming into the country, because there’s an opportunity here. And within the manufacturing sector, you also see more opportunities in pharmaceuticals and in transformation across the food industry.

LATAM FDI: Given all that, that you’ve just mentioned, what message would you give to international investors considering Guatemala as a possible location for a facility?

Juan Carlos Zapata: Well, the first thing is that I, I think when you look at Guatemala, it’s not your obvious choice. So I always tell people to look at macroeconomic stability, to look at, uh, how close it is to the US, how interconnected the country is, the country’s diversity, and, of course, the capabilities of our, um, average age. Because our population is very young, our average age is 27. We have a very active population working to create more opportunities and better working conditions within the country. I think there’s an opportunity just to begin with, given the quality and capabilities of our labor market, and, of course, the logistics Guatemala can generate if you want, not just to export from Guatemala to the US and other countries. Also, Guatemala is a very important hub for operations across Central America or for serving the southern part of Mexico. In short, I would say, because we have been meeting people from Germany, people from Spain, people from Colombia, and Mexico, they, they more— when you talk about people within Europe, most of the time they don’t know about Guatemala and when once they start to understand how the country is so connected to the US, they see opportunities for exporting to, to different parts of North America.

LATAM FDI: Well, in a short period of time, we’ve covered a lot of information here. One thing I’ve noticed after doing podcasts like this for a while now is that I always receive questions from listeners, and I like to direct them to the people I speak with in these podcasts. So, if someone has a question and wants to get in touch with you to ask it, how can they do that?

Juan Carlos Zapata: Yes, please. You can contact me via the FUNDESA website at www.fundesa.org.gt or through our social networks. We’re in all the different networks, and you can also coordinate any effort or follow-up with Invest Guatemala. We work very closely with them to ensure the best red carpet treatment for foreign direct investment in the country.

LATAM FDI: Well, one thing that I do all the time, it seems to be helpful and works, is if it’d be all right with you, include in the transcript of this podcast a link to your LinkedIn page.

Juan Carlos Zapata: Perfect, thank you.

LATAM FDI: And your email address.

Juan Carlos Zapata: Perfect, thank you very much.

LATAM FDI: I want to thank you for being with me today. It’s been very interesting learning about FUNDESA, Guatemala, and the progress being made there. Thank you again.

LATAM FDI: Oh, thank you, Steven. It was very nice to see you.

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.