Due to the precariousness of the English language, in recent years’ companies in the Contact Center & BPO sector have decided to close thousands of jobs in the region and relocate their investments to other markets where they have no difficulty in recruiting qualified personnel.
Reports at a global level show that the command of English is one of the weaknesses at a Central American level.
Because of the economic crisis, Foreign Direct Investment flows have practically vanished, and in order to attract the few investments that are projected for next year, countries are expected to compete by offering incentives and aid programs for businesses.
The covid-19 outbreak dissipated the investment intentions of companies globally. At the beginning of the fourth quarter of the year, there are signs that business confidence has begun to recover; however, pessimism among investors is expected to continue next year.
The health and economic crisis will result in a reordering of foreign investment at the global level, and countries like Central America will have the opportunity to take advantage of their geographical position to attract fresh capital.
The outbreak of covid-19 worldwide will cause a drop in production in 2020, however, by 2021 and 2022 the forecasts of international organizations anticipate that economic activity could rebound, a rise that would be coupled with new investments in various markets and sectors.
Panama and Honduras were the only two Central American countries to report increases in foreign direct investment in 2018 over the previous year, with year-on-year changes of 36% and 3%, respectively.
The growth of investments directed to Panama, which concentrated 51% of the sub-regional total, explained the increase that was reached in 2018 in Central America (9.4%), since except Panama and Honduras, the Central American countries received less Foreign Direct Investment (FDI) than in 2017, explains the report "Foreign Direct Investment in Latin America and the Caribbean 2019", produced by the Economic Commission for Latin America and the Caribbean (ECLAC).
Although a 3% increase in Foreign Direct Investment flows to Honduras is projected for 2019, this increase would be determined by reinvestments of companies already installed in the country, and not by the arrival of new capital.
According to data from the Central Bank of Honduras, in recent years in the country the flow of Foreign Direct Investment (FDI) has ranged between $1,000 and $1,250 million.
Despite the location and the fiscal benefits that in some cases the countries of the region offer, the lack of education of the population will be the main barrier to continue attracting large investments.
The lack of guarantee of finding the competent and sustainable human capital necessary for the proper operation of companies is an issue that negatively influences the attraction of important investments in Central America.
Partly explained by the regimes created to encourage investment in different sectors, countries in the region went from receiving $11 billion in 2016, to $12.1 billion last year.
According to a study by the Center for Economic Integration Studies, in 2017 inflows of Foreign Direct Investment (FDI) in the region reached a record figure of $12.083 billion, registering an increase of 9.8% compared to 2016.When analyzing the period from 2010 to 2017, it can be seen that the inflow of FDI has increased considerably, showing a growth rate of 7.9%.
In the first half of the year, foreign direct investment flows received by the country totaled $620 million, 5.8% more than in the same period in 2017.
The main source of financing of Foreign Direct Investment (FDI) was reinvested earnings.By origin of investment, it was observed that most came from North America, with 37.6% of the total, followed by Europe with 20.3%.
In the first quarter of the year, FDI flows to the country totaled $318 million, reflecting an increase of 2% compared to the $311 million recorded in the same period in 2017.
From a report issued by the Central Bank of Honduras:
The composition of these flows reflects that the majority corresponds to reinvested earnings.By economic activity, those geared towards the Manufacturing Industry stand out (45.0% of the total); as well as Services (21.6% of the total); and Transportation, Storage and Telecommunications (11.4%).From the point of view of the origin of the investment, the most noteworthy figures are those originating from America with 56.1% of the total and Europe with 32.8%.
A delegation of companies from the Mexican state of Jalisco has expressed interest in investing in sectors such as textiles, agriculture, services and construction.
After the visit to Honduras, the businessmen reported that in the next few years they intend to invest between $20 million and $100 million.
Miguel Landero, president of the Mexican Council of Foreign Trade, explained to Laprensa.hn that "... there is a lot of interest in investing in the country ...'In direct foreign investment we could be talking about an intention of $20 million to $100 million, just to start with'."
In 2016 44% of foreign direct investment in the region was concentrated in Panama, and a fourth consecutive year of increases was recorded, with 16%, while Costa Rica received 27% and increased by only 1.1%.
From chapter I of the report "Flows of FDI in Latin America and the Caribbean", by the ECLAC:
FDI into Central America grew by 3.7% in 2016 and totaled 11,833 million dollars.The increase in investments to the two main recipients of the subregion -Panama, which recieved 44%, and Costa Rica, 27%- compensated for the drop in FDI to the other Central American countries.
About $200 million is the estimated investment made by Mexican companies in the first three months of this year, and it is projected that at the end of the year this figure will reach $600 million.
Estimates made by the Honduran-Mexican Chamber of Commerce place the investments primarily in"... technology, installation of wire harnesses and construction of 200 meters of quay which is being developed by Grupo Logra from Mexico in Puerto Cortes, among others."
The Chinese multinational Midea, already present in South America, plans to invest $30 million in expanding and reaching out to markets in Mexico, Central America and the Andean region.
The company Midea, founded in 1968 in Guangdong, China, believes that there is "... a lot of room for expansion"in this region. This was explained to EFE by the Brazilian Joao Cláudio Guetter, president of the Latin American operation.
In the first half of the year foreign investment totaled $652 million, almost 20% more than in the same period in 2015, driven by reinvestment on the part of companies already in the country.
From the report "Foreign Direct Investment Flows - II quarter 2016," by the Central Bank of Honduras:
At the end of the second quarter of this year, Honduras received FDI flows with a cumulative value of US $652.6 million, in annual terms this is an increase of US $105.8 million compared to the amount recorded in the same period last year.