The decline in the number of companies in Nicaragua's free trade zones partly explains the loss of nearly 1,700 jobs in the first two months of the year.
Figures from the Central Bank of Nicaragua (BCN) show that between December 2018 and February 2019, the number of workers decreased by 1,697, from 125,550 to 123,853.
The number of companies in free trade zones also fell at the beginning of the year, from 194 in December 2018 to 187 in February 2019.
On January 5th, 2019, an 8.25% increase in the minimum wage for workers in free trade zones came into effect in Nicaragua.
According to the Ministry of Labor, the minimum monthly wage in the free trade zones last year reached $168 during 2018, and with the increase in force since the beginning of the year, the minimum monthly payment will be $182.
The increase in salary is because employers and workers signed a multi-year agreement to increase the minimum wage annually by a percentage of 8.25% in the period 2018-2022.
From October 1 to 3, Guatemala will be hosting a Conference on Free Zones of the Americas, where topics such as the potential and benefits of companies in the sector will be discussed.
From a statement issued by the Association of Free Zones of the Americas:
Guatemala, September 19, 2018.- The Association of Free Zones of the Americas - AZFA - together with the Santo Tomas de Castilla Free Zone, Chamber of Industry, Chamber of Commerce and the Ministry of Economy, presented the twenty-second Conference for Free Zones of the Americas to be held from October 1 to 3 at Hotel Casa Santo Domingo, in Antigua Guatemala.
After having recorded a slight fall in 2017, companies in the free trade zone regime of Nicaragua plan to achieve a 5% growth in their exports this year.
One of the engines of growth that is expected to be achieved in 2018 is investments and reinvestmentson the part of existing companies that are anticipated for this year. According to free zone entrepreneurs, between $300 million and $400 million could be invested.
As of May 2017, fishing and carton production recorded sales of nearly double in relation to what was observed in 2016, and they are still growing at rates of 10% and 40% respectively.
The Foreign Trade report by the Central Bank of Nicaragua states that"fishing and cardboard production recorded sales of almost double in relation to what was observed in 2016 and continue to grow at rates of 10.4 percent and 40.2 percent, respectively."
From January 2018 until 2022, there will be an annual increase of 8.25% in the wages of workers in free zone companies.
The agreement will be valid for five years and will come into effect from January 1, 2018.
Laprensa.com.ni reports that "...Currently the minimum wage in force in a free zone is US $180, and when the adjustment is applied next year it will go up to approximately US $195".
In Nicaragua, a banana processing and packaging plant has opened up in the free zone regime, with a capacity to process 3,500 cases per day.
The company Banano Líder is now one of the 264 companies operating in the country under the free zone incentive scheme.The new plant, located in La Paz Centro, León, has capacity to process 3,500 cases of the fruit per day.
A proposal put forward by the textile sector seeks to generate trade between national and free zone companies, starting with the possibility that the latter provide raw materials to local companies.
The objective of the Nicaraguan Association of Textiles and Confection of Free Zones (ANITEX) is to generate greater links between the companies that operate under the regime and those in the national market.
Vice president Rosario Murillo gave details on 10 new projects to be executed in the next six months for free zones dedicated to different productive activities.
The 10 projects announced are:
1- Call Center in Managua DMF, 102 direct jobs, 2.7 million investment. 2- OOQIA S.A.
A simpler scheme for importing materials is one of the new features included in the new regulations announced to facilitate procedures for free zone companies.
The leaders of the Superior Council of Private Enterprise (COSEP) announced that the new technical circular for free zone companies will be in effect from February 1, and includes, among other things, adjustments to the time and costs incurred by companies when transporting goods.
Between January and September the value of exports amounted to $509 million, registering an increase of 22% compared to the same period in 2015 and 29% in volume.
The monthly report by the Ministry of Foreign Trade specifies that the export of harnesses represented 14% of total exports from Nicaragua during the first nine months of the year.
The report said that exports of harnesses, along with garments and clothing, were those that were the most buoyant of all the exports under the free zone regime. "... Together they had a share of 58.4% in January-September 2016. "
Although clothing and car wiring harnesses continue to lead, the number of types of goods exported under the free zone regime has gone from ten in 2008 to 20 today.
Production and export of clothing and wiring harnesses are still the main goods produced and exported under free trade zone conditions, but now others have been added such as as cigars, edible oil, fruits, leather shoes, paper, cardboard, and manufactured leather covers for furniture.
Ten companies have already shown interest in setting up in the logistics center to be developed in Tocumen, whose business plan and regulations for a free zone could be ready in September.
Among the activities that will be developed by the companies operating in the logistics park are packing and repacking, as well as product manufacturing and other complementary activities.