Doing Business in El Salvador

Subject (Course): International Trade and Business in El Salvador. Syllabus:

1. Introduction to the Republic of El Salvador (Central America).
2. Salvadoran Economy
3. International Trade of El Salvador.
4. Foreign Direct Investment (FDI) in El Salvador.
5. Doing Business in San Salvador.
6. Case Study: Business Opportunities in El Salvador:
   - Services
   - Textiles
   - Agribusiness
   - Tourism
   - Electronics
   - Medical Devices
7. Case Study: Salvadoran Companies
   - SYKES
   - Pettenati
   - Calvo Group
   - Aeroman
   - Decameron.
8. Introduction to Spanish
9. Access to the Salvadoran Market
10. Business Plan for Salvador

Objectives of the subject "Doing Business in the Republic of El Salvador":

1. To analyze the Salvadoran economy and foreign trade
2. To evaluate business opportunities in El Salvador
3. To explore El Salvador's trade relations with the student's country
4. To know El Salvador's Free Trade Agreements (FTAs)
5. To examine the profile of Salvadoran Companies
6. To develop a business plan for the Salvadoran Market

Sample of the subject - Doing Business in El Salvador:

Subject Description: Foreign Trade and Business in El Salvador

The Republic of El Salvador.

1. The Republic of El Salvador occupies an area of 21,041 Km² in North of Central America.
2. Salvadoran population is 6.3 millions of people, the highest population density in Latin America
3. Borders of El Salvador: Guatemala, Honduras, and Nicaragua.
4. Salvadoran Capital: San Salvador
5. The official language is Spanish and the Mayan languages
6. The main religion in El Salvador is Christianity (6.7 millions of people). Catholics: 5.3 millions of people
7. El Salvador belongs to the Christian Civilization - Latin American area
8. El Salvador gained the independence from Spain in 1821
9. Abolition of slavery in El Salvador: 1824

The economy of El Salvador.

1. El Salvador is situated in a strategic position in Central America, which gives it advantaged access to the largest Latin American and the United States markets.
2. The main sectors contributing to the economic growth were agriculture and services (telecommunications, transportation, and banking).
3. Salvadoran Gross domestic product: 22.114 million dollars.
4. The recent global economic crisis has led to slower growth in the Salvadoran economy, but the impact has been less than other Central American countries.
5. Salvadoran currency is the US Dollar (USD)
6. Since 2001 the Republic of El Salvador is a dollarized economy (absence of currency risk), the economy of El Salvador presented the lowest rates of inflation and interest rate in Latin America.
7. The Republic of El Salvador ranks as the fourth most transparent country in Latin America (Transparency International)
8. The rating agency Moody has been giving "investment grade" to El Salvador since 1997.
9. Macroeconomic stability in El Salvador allowed closing with a 4.7% economic growth rate of the gross domestic product, higher than the 4.2% of the previous year.
10. The inflation in El Salvador has decreased since the 90 until reaching a rate of 4,9%, the lowest rate at the regional level.
11. This is a result of reforms that the Government of El Salvador implemented in 1989, with the goal of stabilizing the economy to attract foreign direct investment: deregulation of fuels, fiscal reforms, elimination of international trade barriers, strengthening of public finances, reforms to the financial system and reforms to monetary integration policy, which stipulates that the United States dollar is the official currency of El Salvador since the law came into effect.
12. The aforementioned has led El Salvador to obtain recognition from prestigious International entities that have distinguished El Salvador for its economic stability, ease of doing business, and competitiveness, among other aspects.

Case Study: Salvadoran Companies.

1. In 2001, after establishing an excellent business relationship with the Investment Promotion Agency, Group Calvo, with a presence in the five continents, decided to install its biggest tuna processing factory in El Salvador. The new plant, built on the Pacific coast of the department of La Unión, in the eastern zone of El Salvador, provides jobs to 3,000 employees around the world, 50% of them living in El Salvador.
2. Pettenati is one of the largest textile companies in Brazil. Pettenati started operations in El Salvador in November 2008 like easiness to reach the United States market taking advantage of the different Free Trade Agreements.
3. SYKES is a global leader in providing customer contact management solutions and services in the business process outsourcing (BPO) arena. In 2001 the company research Latin America and the Caribbean in search of a destination to install a contact center. They found many of these factors in El Salvador and started operations in 2003. SYKES El Salvador has 1,400 employees.

International Trade of El Salvador.

1. Foreign Trade of the Republic of El Salvador experienced a severe recession in 2009 (global economic crisis) affecting external demand.
   Salvadoran imports were 7.254 million USD (decrease of 25.6% compared to 2008).
2. The main export and import markets of the Republic of El Salvador: the foreign trade with major trading partners, which are the markets with which El Salvador has signed Free Trade Agreements and the Central American Common Market accounted for 90% of Salvadoran exports and 70% of its imports.
3. The main Salvadoran export markets were Taiwan (86%), Mexico (17%) and the Dominican Republic (7%).
4. Top twenty-five Salvadorans export products account for 54% of the total exports: textiles (26%), agribusiness (11%), food, and beverages (4%), machinery (3%), paper products and cardboard (3%) and chemical industries (2%).
5. Among the top twenty-five imported products are mining, textiles, agribusiness, chemical, food, and beverages, machinery, and mechanical and electrical equipment, plastic, and rubber manufacturing.

PROESA, the Investment Promotion Agency of El Salvador, is the Government agency responsible for promoting foreign direct investment (FDI) in El Salvador.

El Salvador's Free Trade Agreements and Market Access

1. Central American Integration System (SICA)
2. Central American Common Market (MCCA) - Integrated with SICA -
3. El Salvador's Free Trade Agreements (FTA): Mexico-Northern Triangle, Dominican Republic, Chile, Panama, Taiwan, the United States, the European Union,  and Colombia
4. Association of Caribbean States (ACS)
5. Mesoamerica Project

El Salvador is a member of:

1. Latin American and Caribbean Economic System (SELA)
2. Economic Commission for Latin America (ECLAC)
3. Africa-South America Summit (ASA)
4. El Salvador - Inter-American Development Bank (IDB)
5. Organization of American States (OAS)
6. Forum for East Asia-Latin America Cooperation (FEALAC)
7. World Bank (WB)
8. International Monetary Fund (IMF)
9. World Trade Organization (WTO)
10. United Nations