Textile businessmen say the new free zones law has caught the interest of investors and will strengthen the productive chain.
Elsalvador.com reported that "despite a series of reforms promoted under the table by the Finance Minister Carlos Cáceres, which put companies operating under the Free Zone scheme on alert, the approval of the regulations as they had been agreed between the public and private sector a year ago, "is a tremendous tool (...), a tremendous engine which will make this sector take off," said the president of the Chamber of the Textile, Clothing Companies and Free Zones in El Salvador (Camtex), Jose Antonio Escobar ".
The Chamber of Textile, Clothing Companies and Free Zones states that if the new law on Free Zone included the tax, it would drive away millions of dollars in investments.
Elmundo.com.sv reports that "The Chamber of Textile, Clothing Companies and Free Zones of El Salvador (Camtex) on Wednesday opposed changes made by the Finance Minister Carlos Cáceres to the proposed amendments to the Law on Free Zones, agreed with the sector since October 2011."
Organizations and unions of Salvadoran maquila workers have proposed the creation of an insurance policy guaranteeing payment of 100% of salaries in the event of closure of business operations.
The bill envisaged by organizations and unions also proposes sanctions such as loss of tax benefits for a period of three months for those companies who commit very serious offenses.
Amendments to the Law on Free Zones will define the rules of the game that employers in El Salvador need to know in order to increase their investments in the textile sector.
The newly formed cluster of synthetic fabric textile companies in El Salvador has temporarily stopped their investment plans in order to see what reforms will be made to the Law on Free Zones. In other words, they want "clear rules".
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).
A change in the incentives for foreign investment is needed in order to remain competitive in respect to other countries in the region.
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.
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