After the Nicaraguan company Astro Packing Solution announced an indefinite closure of its operations, local companies predict that packaging will become more expensive in the coming weeks and will be forced to look for new suppliers in neighboring countries.
Retention of raw materials by the authorities of Customs and charges to businessmen by the mayors, are some of the problems that are affecting industrial companies in Nicaragua, in addition to the crisis and the rise in taxes.
Directors of the Chamber of Industries of Nicaragua (Cadin) reported that companies in the packaging, beverage and dairy industries are the most affected by the withholding of inputs made by the General Directorate of Customs (DGA).
Businessmen in the industrial sector in Nicaragua say that since the tax reform was implemented in the first quarter of the year, employment has fallen between 30% and 35%.
On February 27, 2019 was approved the amendment to the Law of Tax Concertation, which consists of raising from 1% to 2% income tax for medium enterprises with higher income. Another of the measures contemplated by the reform is to raise the income tax of large taxpayers from 1% to 3%.
The decline in economic activity is the reason for the year-on-year decline of 36% reported in the capital goods imports up to August this year.
According to figures from the Central Bank of Nicaragua (BCN), between August 2017 and the same month of this year, imports of capital goods registered a fall of 35.8%, declining from $107 million to $69 million.
The complicated situation happening in the country since mid-April has forced nearly 70% of SMEs in the textile and clothing industry to suspend their operations.
According to information from the Chamber of Industries of Nicaragua (Cadin), 30% of small and medium size textile and clothing companies that are producing are doing so at 25% of their capacity.The situation in the sector has led to the temporary suspension of eight out of ten workers.
A strategy focused on increasing competitiveness by reducing production costs and facilitating the creation of added value is what industrial enterprises have asked for.
Improving training in the use of new tools and technology and giving more value to final production are two of the main challenges faced by companies in the industrial sector.The union that brings them together is aware that the potential of the country in this sector can not be maximized if aspects affecting global competitiveness are not improved.
The union has projected growth of 4.4% in 2017 and is counting on attract more foreign investors to partner up with local entrepreneurs to promote the development of industrial activity.
More foreign investment, better use of chains that already exist, such as in the food industry, and reducing the cost of energy are elements that will enhance the development of the Nicaraguan industrial sector, which expects to close 2016 with growth of 3.8%.
Nicaraguan industrialists pay more than their competitors in other Central American countries for the Colombian raw material they consume.
The 35% charged for "patriotic duty" on imported products from Colombia is affecting the performance of the productive sector and taking away competitiveness from Nicaraguan in the region. The business sector is once again demanding the elimination of the tariff particularly for the materials purchased by industrial companies.
Business leaders will form part of the technical committee of advisers to the Grand Canal Megaproject in Nicaragua.
Joseph Adam Aguerri, president of the Superior Council of Private Enterprise (Cosep) and Benjamin Lanzas, chief of the Nicaraguan Chamber of Construction were chosen by the board of Cosep as their representatives to the committee.
Also elected as alternates were Rodrigo Caldera of the Chamber of Industries, (Cadin) and Ricardo Meléndez of the Chamber of Urban Builders (Cadur) .
Footwear, textiles, dairy and meat are some of the goods that have potential to be exported to the Caribbean island.
According to Alfredo Lacayo CEO of Centrolac and the person who led a trade mission of the Chamber of Industries of Nicaragua (Cadin) which traveled to Cuba on May 13, in the case of the dairy industry, the next step is to apply to the Ministry of Health of Cuba to send staff to inspect the Nicaraguan plants in order to certify them for export to that market.
Unions in the region are asking their governments for more support for industry to help it to grow based on tax and customs systems that enable competitiveness.
Laprensa.com.ni reports that, "while there is no 24 hour, 365 days a year service at Nicaraguan borders, customs procedures remain dependent on cumbersome paperwork and the flow of vehicles on existing roads remains congested, you can not discuss a customs union, said yesterday Alfredo Marin, vice president of the Chamber of Industries of Nicaragua (Cadin).
The agribusiness sector drove growth in production, with sugar, dairy and rice as the leaders.
According to an article in Laprensa.com.ni, "The performance of the industrial sector at the end of the year is very positive. Six percent growth has been achieved due to the dynamic combination of various activities that make up the industry."
Most noteworthy were the activities of producers of sugar mills who led production and increased investments in clean energy generation.
Revenues from sugar exports during the first six months of 2012 totaled $145 million, almost 30% more than in the same period last year.
In terms of volume, export growth was 36.5%. In the first half of 2011 201,000 tons were exported, while in the same half of 2012 the export volume was 275,000 tons.
In an article in Elnuevodiario.com.ni Mario Amador, Executive Director of the National Committee of Sugar Producers, CNPA, said industry expectations are optimistic: "We believe this year we will export nearly eight million quintals of sugar, equivalent to $180 million, only in sugar. If we add to that molasses, honey, alcohol, it will be about $220 million. "
Nicaraguan industrialists have asked the Government to reduce the red tape involved in the establishment and operation of a business.
Mario Amador, president of the Chamber of Industry of Nicaragua (Cadin) believes that although there have been advances, such as the creation of the One Stop Investment Center for Exports (Cetrex), much remains be done.
Nicaraguan industry provides the greatest added value to its products and is the largest FDI recipient ($226.4 million in manufacturing, $114.3 million in mining, and $217.1 million in energy).
Sugar producers now not only process sugar, but they also generate energy and biofuel. Mining has diversified and dairy companies are making more investments in technology in various products.
Beverage Industry Digital Magazine established in 1942, the oldest Spanish trade journal and the only beverage trade magazine serving the Latin American beverage market. It serves soft drink bottlers, brewers, bottled water...