El Salvador has seen a substantial influx of foreign direct investment (FDI) in the first half of 2023, totaling $262.6 million, according to the economic results report for the second quarter presented by the Central Reserve Bank (BCR).
The primary sector receiving foreign capital was the industry, with a total of $148.9 million, closely followed by services with $115.9 million. Within the industry, the most significant investments were directed towards beverage production ($43.9 million), manufacturing of non-metallic mineral products ($32.2 million), and food product manufacturing ($24.2 million). Meanwhile, in the services sector, communications attracted $57.4 million, and electricity received $51.7 million.
Minister of Economy, María Luisa Hayem, highlighted that these figures reflect a shift in the perception of the country due to a significant reduction in crime rates. She also pointed out specific actions taken to attract more foreign capital. For instance, reforms to the Free Trade Zone Law have been promoted to encourage international companies to consider nearshoring in the country. Additionally, new regulations such as the Innovation Promotion Law provide a 15-year tax exemption for technology companies.
«Thanks to all the measures taken in the areas of security and the economy, we are seeing increasing interest from foreign investors in establishing themselves in our country,» said Minister Hayem.
In a similar vein, she emphasized recent announcements by multinational companies looking to set up operations in El Salvador. «Now El Salvador is part of those shortlists of multinational companies looking to expand their operations. Google is a prime example of such an investment, and we will soon see it reflected in our national accounts.»
Furthermore, Minister Hayem noted significant expansions of existing companies in the country. Private investment from January to June 2023 totaled $2.2 billion.
As for the source of foreign investment, Spain was the leading contributor to El Salvador in the first half of the year, with an investment of $105.3 million. This amount was divided into $70.4 million in the industry sector and $31.5 million in services.
Mexico followed closely with $94.1 million, with $85.1 million directed towards services and $9 million towards industry. It is important to highlight that several Mexican companies have shown a deep interest in El Salvador due to the remarkable improvement in security and the approval of new fiscal incentives.
In this context, on Monday, September 25th, a delegation of 27 Mexican entrepreneurs – the largest in three years – visited the country to explore business opportunities across various sectors. The trade mission consisted of representatives from technology, logistics, manufacturing, and other industries, who expressed confidence in the country’s new prospects.
Finally, U.S. entrepreneurs invested $78.7 million, with $59.3 million in services and $26.2 million in the industry sector. El Salvador’s ability to attract foreign investment is indicative of its growing reputation as a favorable destination for international business ventures.