The business sector is questioning the decision made by the Constitutional Court to suspend the operation of two hydroelectric stations and is asking for decisions to be made based on legal criteria, giving priority to the national interest.
The Constitutional Court has upheld suspension of the license for the Oxec I and II hydroelectric stations, for allegedly failing to consult indigenous peoples in the area before starting the projects.
The decision taken by the Constitutional Court (CC) is seen by the private sector as a threat to legal certainty in the country, because of the projects that are at stake and the effect it will have on other investments that may no longer be made in Guatemala if orders continue to be given to suspend mining and energy projects.
The business sector is against making retroactive consultations on mining and energy projects as they are already under development and is demanding regulation of the implementation of the ILO Convention 169 in order to protect investments.
Conflicts over land use and environmentallegal actions have kept fourteen hydroelectric power generation projects paralyzed.
Of the fourteen hydroelectric projects on hold, according to the Association of Renewable Energy Generators (Ager), six were suspended for having been declared unconstitutional, two are in the "dialogue process", one is waiting for a ruling from the Constitutional Court and another " ... five will not be developed because of the conflict."
Projects are becoming more expensive due to the fact that they increasingly include more security measures and in areas such as La Libertad, Soyapango, Ilopango and Apopa, some lots and homes are even losing value.
The efforts made by the Ortega administration to attract more foreign investment were noted, but warnings were also give regarding deficiencies in the rule of law and an extensive executive control.
The report"Investment Climate Statements for 2016"prepared by the US State Department details the efforts made by Nicaragua to attract foreign investment by providing tax incentives to productive sectors such as mining and tourism, but also points out some elements that could affect the investment climate in the country, such as weak governmentinstitutions, deficiencies of law and an all-embracing control on the part of the executive branch.
Amcham said that the lack of a clear strategy to attract foreign investment and uncertainty over key issues such as the emergent employment law are causing the country's business climate to deteriorate.
In one week seven projects were suspended and ten others could also suffer the same fate, while 611 license applications are under review.
Ten projects located in Santa Rosa, Quiché, San Marcos, Quetzaltenango, Huehuetenango, Totonicapan and Baja Verapaz are facing law suits for different reasons, from alleged violations of the human right to water to a breach of opposition administrative formalities.
The industrial union has reported that 245 industrial companies ceased paying social insurance in 2015, with some of them deciding to operate in the informal sector and other closing permanently.
Violence and insecurity, the creation of more taxes and lack of legal certainty are some of the factors behind the decision of many Salvadoran companies to completely close their operations or go to work in the informal economy.Data from the Association of Industrialists (ASI) indicates that the informal sector rose from 52% of the economy in 2010 to 72% in 2015.
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.
The contract signed with the concessionaire of the next international airport of Honduras establishes that Toncontin must be closed down. "At this moment" they want to change that contract.
In a demonstration of how insecure the signing of contracts for large public works projects can be in some countries on the isthmus, in the view of the government of Honduras "... the vision at this moment is to not close Toncontin and for Palmerola to start operating and look for a project that is feasible and profitable. "
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PRONicaragua, is the Nicaraguan Investment Promotion Agency, established in 2002. We are a non-profit, public-private institution whose mission is to generate economic growth and job creation in Nicaragua by attracting high-quality foreign direct investment. The Agency provides complimentary support services to qualified investors seeking investment opportunities in our country.
Operates in Nicaragua
Phone: (505) 2270 6400