Safety is More Important Than Tax Incentives

In the view of entrepreneurs, insecurity is still the main factor preventing the arrival of larger flows of foreign direct investment to the region.

Tuesday, September 2, 2014

Despite the benefits and incentives of all kinds offered by governments to encourage the establishment of foreign companies in Central America, as long as violence and insecurity is not tackled in a more effective manner, investment flows will continue to dwindle.

Eduardo Montúfar, a Panamanian auditor at the firm MGI, said "... 'For an investor security outweighs tax incentives.'"

Edenilson Rodriguez of El Salvador, said in an article on that "... the promotion of development laws in each country in the region does not cover the dimension which reflects the image of insecurity, therefore investment decisions repeatedly go to countries where the perception [of security] is high .... Panama and Nicaragua have increased public safety perceptions, but this is not so in the Northern Triangle countries, where the security is perceived as low and the situation risky."

More on this topic

El Salvador: Increasing Insecurity and Decaying Business Climate

February 2016

Warnings have been given over increased insecurity, stagnation in the fight against corruption, and little capacity for Government dialogue in the second half of 2015.

The adoption of higher taxes without a dialogue, the consequences for the country of the increase in homicides from 10 to 18 a day in 2015, and stagnation in the fight against corruption, were highlighted in the evaluation made by the Salvadoran Foundation for Economic and Social Development ( Fusades) regarding the legal and institutional framework of the country during the second half of 2015.

El Salvador: Investment Climate Continues to Deteriorate

August 2015

Insecurity and lack of effective government actions explain the perception of the business sector regarding the investment climate in the country, which has fallen to the lowest level since 1999.

From the Report on the Legal and Institutional Situation first half of 2015 by the Salvadoran Foundation for Development:

Panama's Investments in Honduras Affected by Insecurity

July 2013

When choosing a destination for their investments, Panamanian businessmen see poor conditions for both physical and legal security in Honduras.

This was explained by the Panamanian ambassador in Honduras, Mario Ruiz, adding that lately, trade between the two nations has had difficulties because of the issue of insecurity which "has affected business and has generated concerns about continuing to invest".

Reduced Investment in El Salvador

May 2013

Lack of policies for attracting investment and the climate of insecurity both legally and for citizens is scaring away local and foreign investors.

In terms of Foreign Direct Investment (FDI), this barely grew, by $22 million, during 2012, closing with $463 million while the previous year it had been $441 million.

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