Guatemala: Complaints From Free Zones Continue

Free zone companies denounce lack of legal certainty in the implementation of a new law (Ley Emergente de Empleo), which established a list of activities and goods that they can no longer make or sell.

Friday, April 29, 2016

The Association of Free Zones of Guatemala expects jobs and foreign investment to be lost if there are no modifications to the Agreement 65-89 "Ley Emergente de Conservación de Empleo", a law which came into effect in March.

Rene Galindo Castañeda, president of the Association, said in an article on Elperiodico.com.gt that "... the adoption of this legislation has created uncertainty among businessmen... 70 percent of companies in free zones are based on foreign investment. In the absence of legal certainty they will look for another country that "respects acquired rights' and does not apply laws retroactively, as the emergent law does."

"... According to the Association there are 282 businesses classified by the Ministry of Economy (Mineco) as set up within free zones, but with the coming into force of Decree 19-2016, about 125 companies have entered into a commercial 'impasse'. Ten of them have already started the process of closing operations in the country."

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Dwindling Investment in Free Zones

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In Guatemala, only 141 of the 205 free zone companies that had to report their 2016 activities presented their reports, and half of them declared not having made any investment during the year.

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Guatemala: Free Zones Situation Gets More Complicated

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It has been reported that one of the 17 free zones operating in the country has started the process of closing its operations entirely due to the legal uncertainty generated by the emergent employment law.

Companies operating in free zones have spent several months denouncing the serious situation they have faced since the Emergent Act for the Conservation of Employment was implemented, instead of encouraging investment and job creation, it has become a good example of how to discourage investment in a country.

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