In a context of slowdown in industrial activity and loss of jobs, the industrialists' union of El Salvador calls for a policy of attracting investment through incentives and reviewing and taking advantage of existing trade agreements.
El Salvador's industrial sector registered a 0.9% growth in the first half of 2019, two percentage points less than last year during the same period, a fact that shows that economic growth in El Salvador remains slow and low, remaining at 2%, reported the Salvadoran Association of Industrialists (ASI).
Difficulty in stocking up on raw materials and high prices are some of the most frequent obstacles facing industrial entrepreneurs in El Salvador.
The United States Agency for International Development (USAID) and the Salvadoran Association of Industrialists (ASI) are carrying out an investigation in which conclusions have been reached that 70% of the industrial sector buys its raw materials in the country, but they stated that there is often lack of availability of inputs.
The union of industrialists states that the government's five-year plan lacks any definition of concrete actions which would allow it to bring about anticipated results.
From a statement issued by the Salvadoran Association of Industrialists (ASI):
In the view of industrialists it is a document which contains some important evaluations and defines priorities for government issues, but it lacks a concrete action plan to provide solutions to the serious problems we Salvadorans are facing, especially with regard to violence, stagnation of the economy and lack of jobs.
In the view of industrialists, bureaucracy, excessive tax burden, high electricity rates and insecurity explain the limited performance of the industrial sector during 2014.
From a statement issued by the Salvadoran Association of Industrialists (ASI):
The Salvadoran Association of Industries (ASI) has revealed the results of the industry's performance during 2014, detailing the different productive sectors.
According to entrepreneurs the government's proposal for the development of the manufacturing sector does not include a budget nor does it specify how results will be measured.
The Salvadoran Association of Industrialists (ASI) highlighted a number of deficiencies observed in the National Policy for Development, Diversion and Productive Transformation of El Salvador.
The subsidy for residential rates and the pricing scheme used by the government generates high electricity costs for the industrial sector.
The price of energy in El Salvador remains one of the highest in the region, especially for the industrial and commercial sector. The subsidy for the residential rate and the pricing scheme used by the Government cause the cost of electricity to be high, taking away competitivity from both sectors.
The Salvadoran industry sold $3,649,000 worth of goods between January and August 2012, 0.5% less than in the same period in 2011.
The decline occurred despite a 8.5% increase in export volumes, which reached 2.009 million kilograms, 158 million more than in the previous year.
Javier Siman, president of the Salvadoran Association of Industrialists (ASI), highlighted the 8.5%, indicating that it is a sign that the industry is positioned to compete. "Despite all the obstacles, such as red tape, lack of loans and incentives, the business sector has made an effort”, he added.
"What makes a country prosperous is not its resources but how productive it is. A country is not rich because of what it has but because of what it does with it " - Javier Simán.
An analysis by Claudio M. de Rosa in an article in Laprensagráfica.com, refers to the economical situation and the political circumstances in El Salvador, but most of the concepts and findings can be extrapolated to the entire Central American region.
Despite adverse economic conditions the industry has managed to grow 1.27% this year.
Details given by the Salvadoran Association of Industrialists (ASI), indicate the area which have rebounded the most is textiles, while construction closed with a negative -5.4%.
Elsalvador.com reported statements from Javier Siman, president of the ASI, indicating that industry remains stagnant and has not grown as expected.
The Salvadoran Association of Industrialists (ASI) will submit a proposal with new policies to seek recovery of the sector.
The union's executive director, Jorge Arriaza, told Elsalvador.com that part of the proposal will be submitted during the Sixth Congress of ASI.
"... Among subjects set out: the definition of a policy for financing the industrial sector, better electricity prices and incentives for new investment.
Industrial companies complain that the high cost of energy is taking its toll on the competitiveness of the country’s industries.
This was stated by Javier Ernesto Simán, president of ASI, the Salvadoran Industrial Association. He remarked the country needs to increase its generation of renewable energy.
He supports the construction of El Chaparral hydro power plant, but complains it comes ‘too late’.
As of November 2008, local industry lost 7,000 jobs as a result of the reduction in production and sales.
Elsalvador.com reports on its website: "The Salvadoran Association of Industrial Companies (ASI) presented its 2008 Industrial Report.
"With the fall in the Volume of Industrial Production, job loss began and this is logical as companies are producing less, fewer labor is required," explained the technical manager of the group, Doris de Rivera."
Business will soon pay 38 percent more for electricity in El Salvador. The private sector is negotiating with the government over the stages in which the increase will be applied as the subsidy is gradually eliminated.
El Salvador President Antonio Saca says the difference between the real cost of energy and the amount the privat sector ccurrently pays has widened due to rising energy costs.
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