3.2.2.- El Salvador
The evaluation of the seventeen key aspects to determine the business competitiveness of El Salvador is given in the table below.
1. Political aspects (3). El Salvador has faced severe internal problems but has managed to stabilize its country in a remarkable way. Politics are considered stable although many problems on primarily a social level still need to be solved.
2. Social aspects (2). The poor distribution of wealth is still the main reason for El Salvador’s social problems. It is catalyzing crime as well as related problems like education, health care and illiteracy.
3. Safety (1). Safety is regarded as poor in El Salvador. Poor law enforcement and high poverty rates make crime a vast problem in El Salvador’s metropolitan areas. Organised crime is a serious problem in El Salvador, as is corruption in the police force.
4. Economic aspects (3). El Salvador has a solid economy which is developing positively. A weak point is that the main source of income are the remittances, money send back by immigrants to their families. Safety in the country is a strong limiting factor for further development.
5. Fiscal aspects (2). El Salvador has had lots of corruption and tax money was either not paid or ended up in wrong hands. The tendency is that fiscal aspects are improving due to confidence from the tax payers in their government and in the development of their country. There is also increased control on paying taxes executed by the government.
6. Investment capital (3). Investment capital is not very easy to obtain as banks have no focus on non-traditional crops. However, costs are lowering and the government is pushing for more investments in the (non-traditional) agricultural sector. On top of that, there is a trend in the banking world to take over Central American banks and banks in El Salvador are amongst them. It is likely that this tendency will further improve the access to investment capital for (foreign) companies planning to invest in El Salvador.
7. Infrastructure (local, 3). Although the countryside is still not very accessible, the main roads in El Salvador are in excellent condition. Hardly any complaints have been registered on this issue. Electricity is not considered as a limiting factor for doing business.
8. Infrastructure (export, 2). International ports only exist on the Pacific side of the country as El Salvador has no access to the Caribbean Sea. Nevertheless, land transport to Caribbean ports takes about 5 – 6 hours and no extra charges at borders (Honduras or Guatemala) are applied. Facilities at the international airport are limited (cooling facilities) and availability of freight carriers is limited as well.
9. Communication (4). Communication is considered to be very good in El Salvador and due to the large number of players in the market, quite competitive. This can be regarded as surprising as communication was one of the major issues of concern during the eighties and nineties. Availability and quality of internet (broadband) is good.
10. Trade agreements (3). El Salvador has a large number of trade agreements opening doors for future exports. The trade balance still shows very negative figures but recent governments have made a big effort to facilitate exports.
11. Climate and natural resources (3). El Salvador has a good climate for various fruits, exotic plants and vegetables. Land is available although it is considered to be rather expensive and the acquisition of properties is limited to certain acreages. Accessibility and quality of water is no problem.
12. Agricultural sector organization (3). Although no groups of growers of specific crops exist, the sector can rely on strong organizations like PROESA and EPORTA. Various initiatives are taken to develop the agricultural sector and stimulate exports. Growers themselves consider their interests to be taken care of in a proper way.
13. Phytosanitary service (3). To obtain import or export permits is not an obstacle for doing business although obviously, there is a lack of knowledge in the Ministry to fulfil certain tasks due to the small size of the sector.
14. Agricultural supplies (2). The agricultural sector in El Salvador is small and so is the supply sector. Quite some materials have to be imported making them expensive. Imports as such are not considered to be a problem. The future of this sector can be regarded as promising as doors are being opened for exports within the Central American region.
15. Labour (unskilled, 3). El Salvador is known for its good labour. Costs are low, availability is good and people are motivated. Labour can therefore be regarded as one of the main reasons to invest in El Salvador.
16. Labour (management, 2). Qualified management is hard to become in El Salvador and there is a lack of practical knowledge obtained abroad. In El Salvador itself, due to the small size of the sector, it is hard to find experienced personnel.
17. Subsidies (3). El Salvador has various incentives from international governments for development programs. The local government is also putting more emphasis on the development of non-traditional agriculture specifically and rural areas in general. PSOM, PESP and the new Match Making Facility are available for El Salvador.
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