El Salvador and Free Zone Laws

A change in the incentives for foreign investment is needed in order to remain competitive in respect to other countries in the region.

Friday, May 27, 2011

The modernization of the law on free zones, which countries like Costa Rica reshaped in 2005, for the purpose of improving incentives to attract foreign companies is still in process in El Salvador.

The discussion to reform the law goes back to earlier this year, when the private sector, represented mainly by the textile sector, which accounts for 75% of companies operating under the free zone regime, began reviewing the law with the government .

So far only about 70% of the law has been revised, and private sector representatives say the rest could be ready by the end of the year. Meanwhile, 80 thousand direct jobs and 160 thousand indirect jobs could be hanging by a thread, seeing as there are other countries in the region who have free zone laws with more incentives of possible interest to foreign companies.

An article in Elsalvador.com notes: "El Salvador is currently ranked the 11th largest provider of textiles and clothing to the U.S, which represents an opportunity because this market alone means about $100 billion annually."

More on this topic

Textile Industry Hopes for Free Trade Area Reforms

November 2011

New investments in the sector are pending the approval of El Salvador's new tax-free zone law.

According to the Salvadoran chamber of textile manufacturers (CAMTEX in Spanish), the reforms being considered by the government comply with all the demands made by the World Trade Organization (WTO).

El Salvador: New Law on Free Zones Delayed

August 2011

There is a growing demand for textiles and clothes manufacturing, but a new Law on Free Zones is needed in order to bring fresh investments to this sector.

The World Trade Organization (WTO) has determined, after two extensions, the country should, in 2015, replace the law that has been in force since 1998, which grants tax benefits such as a total and permanent exemption from taxes, among others.

Free Zones Act Advances in El Salvador

May 2011

Government and private company representatives have achieved an 80% consensus on the new draft law on Free Zones.

So says the executive director of the Chamber of the Textiles, Clothing and Free Zones (CAMTEX), Patricia Figueroa, without providing specific details on the proposals.

El Salvador: A More Competitive Free Zone Law

May 2010

Such is the desire of Salvadoran textile businessmen, who hope to transform the country into a more attractive destination for foreign investment.

CAMTEX, the Textile and Apparel Chamber, explained they are having talks with the government to draft a new law which complies with WTO requisites (World Trade Organization).

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