Empresa Tomza Guatemala S.A. reported that in Nicaragua the government of President Daniel Ortega illegally expropriated and confiscated the company's assets, which together amount to $4 million in investments.
The expropriation process took several years. Tomza executives explained that in 2015 they were granted the permits for the construction of a property located in the municipality of Tipitapa, department of Managua.
To the denouncements made in recent months by businessmen from Guatemala and Nicaragua, is added that of a Honduran union, which denounces the invasion of 3,400 manzanas of productive land.
Because the area of stolen land in Guatemala has grown from about 10,000 hectares in the 1990s to 164,000 in 2018, losses in agricultural production caused by this phenomenon reached nearly $650 million last year.
The Chamber of Agriculture (Camagro) estimates that only in 2018, invasions of private property, mainly agricultural production farms, generated a negative impact equivalent to 0.6% of Gross Domestic Product.
Reducing trade barriers and procedures, increasing legal security and improving productive infrastructure are part of the changes required by the business sector for the region's economic development.
In Guatemala, the 12th Ibero-American Business Meeting is held, in which the private sector presents proposals to face the current challenges and generate opportunities for the countries of the region.
The court's pronouncement that declared legal the strike of the state fuel refiner and distributor in Costa Rica "has not been competent and introduces us into a very dangerous legal insecurity for national investment and the attraction of foreign investment."
From the statement of the Chamber of Industries of Costa Rica:
Fuels are critical and Costa Rica must be defended as well
Lack of legal certainty, electricity theft and social conflicts are forcing businessmen in Guatemala's energy sector to choose to relocate their investments to El Salvador.
Last year, the companies Applied Energy Services (AES) and Corporación Multi Inversiones (CMI), both US and Guatemalan capital, decided to invest $47 million in solar energy projects, encouraged by the facilities offered to the energy sector in El Salvador.
Adverse court decisions against companies, social and political conflicts and fiscal issues are some of the factors that are impeding the development of productive projects in Central American countries.
One of the latest court decisions affecting companies with investments in the region was that of Minera Petaquilla, in Panama. The contract that this company had signed with the Panamanian State was declared unconstitutional last week.
The unprecedented increase in violence in Costa Rica, once an oasis of peace in the region, is another sign of the failure of the traditional methods of fighting drugs.
EDITORIAL
More powerful than the Central American states, drug trafficking is on the rise not only in terms of an increased supply of drugs in the countries in the region, but through its permeation of institutions using the power of money and generating a growing culture of violence that is making Central America´s lack of a death penalty seem risible. Yes it does exist, but the worst part about it is that it is not institutionalized justice systems that implement it, but the mob bosses, pointing out -to ever younger executioners- the people who should be executed.
If Central America does not strengthen the institutions that ensure a stable legal framework and full respect for contracts, foreign investment will not come and national investment will go to other countries, no matter how many incentives and tax exemptions are offered.
EDITORIAL
The frequent displays of discontent for the Salvadoran Executive Branch in respect to rulings issued by the Constitutional Court and the inaction of the Panamanian government over blockades by a group of people are holding not only over the hydroelectric project Barro Blanco, but also the main access roads, are appalling signals sent from the region to the world, casting doubt on those companies who consider the region to be a potential investment destination.
After the signing of a contract between the government of Nicaragua and a norwegian company to explore for hydrocarbons, Costa Rica has noted that the award was made on disputed maritime areas in the International Court of Justice.
An article in Nacion.com reports that "... Foreign Minister Manuel Gonzalez said he prepared the letter to the company that received the rights to explore and exploit hydrocarbons in the Pacific coast, in an area that lacks clear boundaries between the Costa Rican and Nicaraguan territory."
Despite widespread opposition from all productive sectors in the country, President Solis has lifted the ban on reforms to the law on labor procedures imposed by the previous administration.
From a statement issued by the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP):
Lifting of veto outrages and concerns business sector
Investors are on the alert over possible modification to the Law on Free Zones while analysts are warning that this would generate legal uncertainty.
The government will be revising the law on free zones in order to avoid companies who are not operating under the regime from moving into it and avoiding paying taxes.
The Ministry of the Treasury announced that it will be revising in detail the modification made in 2009 to the law on Free Zones, which since 2010 allowed non exporting companies into the regime as, "there is a fear that there could be a mass movement of local companies into the scheme, which currently pay taxes, and this could lead to a drop in collections."
In the view of entrepreneurs, insecurity is still the main factor preventing the arrival of larger flows of foreign direct investment to the region.
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.
The productive private sector is signalling a lack of dialogue and clarity as well as conflicting messages from the authorities of the new Costa Rican government, which is also proposing laws that discourage investment.
An increase of more than 4% in the salaries of public officials, lack of action over lowering the cost of energy, lifting barriers which generate legal uncertainty, and initiatives to increase the tax burden on the formal productive sectors are the issues concerning entrepreneurs in Costa Rica.
The Costa Rican government will ask the International Court of Justice to determine the border between the two countries in the Caribbean and Pacific.
Both countries have not reached an agreement over the delimitation of their maritime boundaries, and the recent decision by Nicaragua to tender exploration and exploitation of oil in Caribbean waters has alarmed the government of Costa Rica which has denounced Nicaragua for offering such licenses in areas that Costa Ricans consider belongs to them.