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Country Presentation ● 2016
OUR SERVICES
• Information about
Nicaragua and business
opportunities
• Customized information
packages
• Organization of site visits:
meetings with companies
and institutions
• Support with information
on the structure of
operational costs and
fiscal charges
• Identification of options
for locations for real
estate
• Legal advice
• Directory of suppliers of
related goods and
services
• Support and facilitation
Assessment and
decision making
Implementation of
the project
• Facilitate and expedite
government procedures
• Support in facilitating the
exporting process
• Information about
business opportunities in
the Caribbean Coast
through our regional
office PRONiCaribe
Aftercare
PRONicaragua is the Official Investment Promotion Agency of the Government of Nicaragua.
COUNTRY PROFILE
Capital Managua
Area 130,373.4 km2
Official Language Spanish
Population 6.2 million
Currency Córdoba
Exchange Rate
C$28.62 = US$1.00
(2016 Average)
Time Zone UTC/GMT -6 hours
Región Central /
Central Region
Región Pacífico/
Pacific Region
Región Caribe/
Caribbean Region
Source: Central Bank of Nicaragua.
STRATEGIC LOCATION
2015 ECONOMIC FIGURES
Gross Domestic Product US$12.69 billion (4.9% growth vs 2014)
GDP per capita US$2,027
Exports US$4.89 billion
FDI Inflows US$1.22 billion*
Gross International Reserves US$2.49 billion (2.35 times the monetary base)
Inflation 3.05%
Devaluation of Currency 5% annual vs. US Dollar
Sources: Central Bank of Nicaragua, Ministry of Development, Industry and PRONicaragua. *Estimates Data
ECONOMIC GROWTH
Gross Domestic Product
14.00
12.69
Real GDP Growth (%)
12.00
2011
2012
2013
2014
2015
6.2
5.1
4.5
4.7
4.9
Billion US$
10.00
8.00
6.79
11.81
9.76
8.49
8.38
8.74
2008
2009
2010
10.46
10.85
7.46
6.00
4.00
2.00
0.00
2006
2007
2011
2012
2013
2014
2015
Min Zhu, Deputy Managing Director of the IMF, described Nicaragua´s economic growth as “excellent”
as it has outperformed Latin America´s average growth rate of 1.2% and
Central America´s 2.2%.
Source: Central Bank of Nicaragua.
GDP GROWTH IN THE REGION
GUATEMALA
GDP 2015: 4.1%
Average of 5 years: 3.8%
HONDURAS
GDP 2015: 3.6%
Average of 5 years: 3.5%
NICARAGUA
EL SALVADOR
GDP 2015: 2.6%
Average of 5 years: 2.1%
GDP 2015: 4.9%
Average of 5 years: 5.1
COSTA RICA
GDP 2015: 3.5%
Average of 5 years: 4.0%
Source: Central Bank of Nicaragua and IMF.
PANAMA
GDP 2015: 6.0%
Average of 5 years: 8.4%
ECONOMIC STABILITY
Nicaragua maintains positive relations with different multilateral organizations such as the
International Monetary fund (IMF), World Bank (WB), the Inter-American Development Bank
(IDB), and the Central American Bank for Economic Integration (BCIE)
•
•
•
On July 2015, Moody´s announced an improvement in the
credit rating of Nicaragua, going from B3 to B2.
On December 2015: Fitch Ratings assigned B+ for the first
time to Nicaragua with steady perspective.
On February 2016: Standard & Poor's assigned B+ for
credit ratings, local and foreign currency. The perspective
of the qualification is long term steady.
ҬThe macroeconomic policies implemented by the Government of Nicaragua are positive, and should
serve as an example for Latin America”
Min Zhu, Deputy Managing Director of the IMF
EVOLUTION OF FOREIGN DIRECT INVESTMENT
18% compound annual growth rate
1.60
1.36
1.40
1.45
1.24
1.22
US$ Billion
1.20
0.94
1.00
0.80
0.63
0.60
0.40
0.43
0.38
0.51
0.28
0.20
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015*
According to preliminary statistics from 2015, the sectors that registered more FDI inflows were:
telecommunications, industry and commerce and services.
Source: Central Bank of Nicaragua, Ministry of Development, Industry and Trade
and PRONIcaragua.*Estimated data
EVOLUTION OF EXPORTS
14% compound annual growth rate
6.00
5.00
5.14
4.82
4.74
2012
2013
4.90
4.36
US$ Billion
4.00
3.45
3.00
2.74
2.62
2008
2009
2.33
2.00
1.99
1.00
0.00
2006
2007
2010
2011
2014
2015
For 2015, total exports reached US$4.9 billion. The main export destinations were: the United States,
Central America, Mexico, the European Union and Venezuela.
Source: Central Bank of Nicaragua.
MAIN EXPORT PRODUCTS
2015 Main Export Products (% of total value)
Textile and Apparel (26.8%)
Cigars and Tobacco (4.5%)
Automotive Harnesses (11.7%)
Dairy Products (4.0%)
Bovine Meat (9.4%)
Sugar (3.2%)
Coffee (8.6%)
Shrimps (3.1%)
Gold (6.5%)
Peanuts (2.1%)
Source: Ministry of Development, Industry and Trade.
AN IDEAL EXPORT PLATFORM
Access to 1.5 billion people
Free Trade Agreement
Preferential Access Agreement
Solidarity Union Agreements
Central American Common Market
Agreements under Negotiation
Source: Ministry of Development, Industry and Trade.
MARKET ACCESS
Nicaragua constantly seeks to increase its access to the world’s most important markets in order
to consolidate itself as the ideal export platform.
Agreements
Countries
Free Trade Agreements
United States, Mexico, Panama, Taiwan, Dominican
Republic, Chile & European Union
Central American Common Market
Nicaragua, Guatemala, El Salvador, Honduras & Costa Rica.
Additionally, free movement of capital, services and
human resources among CA-4 countries.
Generalized System of Preferences
Japan, Norway, Canada, Russia and Switzerland.
ALBA agreement
Agreements under Negotiation
Source: Ministry of Development, Industry and Trade.
Venezuela, Ecuador, Granada, Saint Lucia, Bolivia, Cuba,
Antigua & Barbuda, Dominica, and Saint Vicente and the
Grenadines
South Korea, Canada, Peru, Bolivia.
ALADI (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador,
Mexico, Paraguay, Peru, Uruguay, Venezuela y Cuba)
LABOR FORCE
Formal Employment
900
773
800
Thousand of employees
700
600
500
420
459
493
504
2008
2009
535
578
624
674
710
400
300
200
100
0
2006
2007
2010
2011
2012
2013
2014
Demographic Indicators
Population under 39 years old 76.1%
Labor Force* 3.2 million
Source: Central Bank of Nicaragua. *2014 third quarter estimated data
Unemployment* 6.7%
Underemployment 46%
2015
MODEL OF DIALOGUE AND CONSENSUS
The Government of Nicaragua, the private sector and workers coordinate efforts and design
strategies to:
1.
Promote economic development
2.
Generate new decent jobs
3.
Reduce poverty
Governmental entity chaired by the President with government and private sector
representatives, to follow up on agreements and promote better working relationships.
The model of dialogue and
consensus has been
included in the article 101 of
the Political Constitution of
Nicaragua.
Signing of tripartite
agreement between
government, private sector
and union leaders to fix
minimum wage increases
and social responsibility
strategies in the long term.
More than 100 laws passed
by consensus with the
Superior Council of the
Private Enterprise (COSEP).
DEVELOPING THE ENERGY SECTOR
Since 2007, the Government of Nicaragua set out to: increase generation capacity, Expand
coverage, and go green, as part of its key development strategies of the country.
2007
2015
2020
10%
26%
50%
50%
74%
90%
Installed Capacity: 819 MW
Installed Capacity: 1,346 MW
Thermal
Expected Capacity: 1,666 MW
Renewable Energy
Installed capacity has increased 64% since 2007.
Coverage has reached 85% of the national territory.
Source: Nicaraguan Energy Institute.
LEGAL FRAMEWORK FOR FOREIGN INVESTMENT
The Foreign Investment Promotion Law (344) offers investors fundamental guarantees such as:
•
Full currency convertibility
•
Freedom to expatriate all capital and profits
•
Full international ownership
•
No discriminatory treatment for foreign investors
•
Full protection of intellectual property rights, patents, and brands
•
Access to loans through local banks, according to their terms and conditions of
approval.
Nicaraguan legislation allows the setup of companies with 100 percent of foreign capital; in
other words, the participation of national partners is not necessary.
Additionally, the Mediation and Arbitration Law (Law 540) governs two alternate methods to the judicial
process to expeditiously solve any dispute resulting from contractual relations between parties.
FREE ZONE REGIME
GEOGRAPHIC LOCATION
# of
Companies
Share
Apparel
81
39%
Tobacco
33
16%
Agroindustry
27
13%
Outsourcing Services
25
12%
Automotive Harnesses
5
2%
Other
36
17%
Total
207
100%
Sector
Department with free zones
Department without free zones
Source: National Free Zone Commission
FREE ZONE EVOLUTION
2007
2015
Change
Industrial Parks
32
50
56%
Companies
120
207
73%
88,750
110,314
24%
1,000,051
1,901,876
90%
Exports (millions of US$)
1,106
2,557
131%
Exports / Employment
12,459
23,182
86%
740
533
-28%
Employment
Industrial Space (m2)
Employment / Companies
Source: National Free Zone Commission
FISCAL INCENTIVES
Free Zones Incentives Law (Law 917)
Nicaragua offers significant fiscal incentives under the free zones regime for industrial companies
with transformation or value added processes and that will exporting all of their production. The
law is administered by the National Free Zone Commission.
100% tax exemption of:
•
•
•
Income tax 1
Import taxes for machinery, equipment, and
raw materials
Municipal tax
1Valid
•
•
•
Sales tax
capital and property tax
real state taxes
for 10 years with the possibility to be extended once with previous authorization.
MINIMUM SALARY - FREE ZONES
An agreement signed by the Government of Nicaragua, the Private Sector and Unions that sets
forth increase rates on minimum wage for a specific period of years in the future, applicable to
companies in the Free Zones Regime.
The third edition of the Tripartite Agreement established the following increase rates:
Minimum Wage by Law (US$)
2014
2015
2016
2017
Monthly wage, including fringe
benefits (48%)
228.35
234.88
241.58
248.48
Hourly wage, including fringe
benefits (48%)
1.09
1.13
1.16
1.19
The 8% yearly increase equals to 2.9% in U.S dollars, due to the 5% annual devaluation rate
This positive dialogue between all parts provides predictability and reflects
the country’s stable investment climate.
INDUSTRIAL PARKS IN NICARAGUA
Nicaragua has one state-owned industrial park called
“Las Mercedes”, which is administered by the
Free Zones Corporation.
Additionally, there are over 15 privately-owned industrial park that offer quality industrial space
to companies operating under the free zone regime. Most of these parks also offer a rent-to-own
option.
Industrial Real Estate – Basic Structure
Type
Tariff per m² (US$)
Rent
3.00 - 4.50
Some of the services provided include: perimeter
security, maintenance, customs office, water
treatment plant and collection and disposal of solid
wastes.
NICARAGUA’S VALUE OFFER
A Competitive Cost
Structure
Low labor costs + generous fiscal incentives
+ FTAs with main international markets
High degree of social cohesion resulting from dialogue between the
Government, the private sector and workers
Pro-business government that understands the value of foreign investment
and supports their successful development.
High levels of personal safety and great quality of life.
COMPANIES UNDER THE FREE ZONE REGIME