3.2.3.- Guatemala
The evaluation of the seventeen key aspects to determine the business competitiveness of Guatemala is given in the table below.
1. Political aspects (2). Guatemalan politics have been corrupt and instable for many years. The recent government of Berger has shown substantial progress, less corruption and more stability but violence and safety have only gotten worse. Due to the numerous cultural differences and the violent and painful history of Guatemala, it is hard to create a unified country. The year 2007 will give the country a new President. It is unsure what future politics will look like and therefore it is regarded as ‘regular’.
2. Social aspects (2). Widespread poverty and the weak rule of law are at the root of the frequent outbreaks of social unrest over the past few years. Other aspects such as education and social stability are considered to be regular.
3. Safety (1). Criminal activity is a serious problem in both rural and urban areas and reflects the ready availability of firearms, the high unemployment and poverty rates, a poorly trained and under-resourced police force, and a weak justice system.
4. Economic aspects (3). The Guatemalan economy has performed rather well in recent years and it is expected that growth will continue and Foreign Direct Investment will further increase although safety is a factor which might slow the economy down. Not just because of above mentioned aspects, but also because of the excessive costs to solve the problems.
5. Fiscal aspects (3). Guatemala has a fairly attractive fiscal system without excessive bureaucracy.
6. Investment capital (2). Like in other Central American countries, investment capital is expensive and scarcely available. Banks give no priority to agriculture and do not consider agricultural properties as sound guarantees. There is a bank that has its focus on investments in the agricultural sector, but mainly for small and medium sized companies.
7. Infrastructure (local, 3). Roads in Guatemala are quite good and most common places are easily accessible. An effort is being made to improve the most important roads. Most secondary roads are in poor condition especially in the rainy season. Electricity is available and not considered to be a problem. In Guatemala again private investments are being done to increase electricity from hydroelectric sources.
8. Infrastructure (export, 3). Guatemala has access to both the Caribbean Sea and to the Pacific Ocean. Connections with Europe are limited compared to Honduras and Costa Rica. However, most exports have the USA as their final destination. The airport has adequate facilities but only few non-traditional agricultural crops are being exported with air freight. Air freight is considered to be relatively expensive and some companies prefer to export by boat to the United States and from thereon by airplane if the final destination is Europe.
9. Communication (3). Communication has improved rapidly and is considered to be good. Lots of areas still have to be reached but for foreign investors, having their head offices in Guatemala City, quality of services is good.
10. Trade agreements (3). DR-CAFTA has been signed in 2006 which has still prevented quite some companies from leaving the country. Guatemalan vegetables, fruits, ornamental plants and other non-traditional exports to the US are duty-free. After signing DR-CAFTA, foreign investment has started to increase again. Guatemala has quite some trade agreements but has not been capable so far in making optimal use of them.
11. Climate and natural resources (4). All sorts of climates can be found, land is available and costs are acceptable although the rate of renting agricultural land in the region where sugar cane is being produced is rising. Water is good and available naturally or through irrigation projects.
12. Agricultural sector organization (3). Agexport is the main organization taking care of the interests of the agricultural sector. It is a professional organization and the organizational structure and sector divisions are well organized. A remark made during various interviews was that there is a lack of action plans and involvement from Agexport in the sector itself.
13. Phytosanitary service (3). Guatemala has a well functioning phytosanitary service for both imports and exports, although they take their time for the administrative procedures (bureaucracy).
14. Agricultural supplies (3). Supplies of services and products are available for commodities at competitive prices and to a lesser extent for more technified crops and specialties.
15. Labour (unskilled, 3). Labour is available and affordable. Cultural differences and languages make communication and training more difficult. There is a tendency that unskilled workers have no commitment to the company they working in and change jobs more frequently.
16. Labour (management, 3). Management is skilled but like in other Central American countries, it is hard to find people with practical knowledge and (international) experience.
17. Subsidies (2). Dutch programs like PSOM and PESP are available but financial support from the local government hardly exists. The support given to the agricultural sector is mainly through technical assistance programs.
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