Strengthening government institutions in the areas of contract enforcement, property rights protection and investor protection are part of the recommendations made by the IMF in its most recent visit to the country.
According to the international organization, policies to regain the confidence of the private sector, including a frank assessment of the impact of recent measures, are essential to promote economic recovery and compensate for increased poverty. In the short term, strengthening government institutions in the areas of contract enforcement and efficiency of the legal framework for dispute resolution, protection of property rights, investor protection, property registration, and insolvency resolution could significantly improve the country's competitiveness.
Between the first semester of 2018 and the same period of 2019, the flows of Foreign Direct Investment reaching the country decreased by 25%, a decrease that is explained by the uncertainty that predominates among businessmen, derived from the political and economic crisis.
According to official figures, from January to June of this year the country received $364 million in Foreign Direct Investment (FDI), which is less than the $483 million received in the first six months of 2018.
Panama and Honduras were the only two Central American countries to report increases in foreign direct investment in 2018 over the previous year, with year-on-year changes of 36% and 3%, respectively.
The growth of investments directed to Panama, which concentrated 51% of the sub-regional total, explained the increase that was reached in 2018 in Central America (9.4%), since except Panama and Honduras, the Central American countries received less Foreign Direct Investment (FDI) than in 2017, explains the report "Foreign Direct Investment in Latin America and the Caribbean 2019", produced by the Economic Commission for Latin America and the Caribbean (ECLAC).
Despite the location and the fiscal benefits that in some cases the countries of the region offer, the lack of education of the population will be the main barrier to continue attracting large investments.
The lack of guarantee of finding the competent and sustainable human capital necessary for the proper operation of companies is an issue that negatively influences the attraction of important investments in Central America.
Partly explained by the regimes created to encourage investment in different sectors, countries in the region went from receiving $11 billion in 2016, to $12.1 billion last year.
According to a study by the Center for Economic Integration Studies, in 2017 inflows of Foreign Direct Investment (FDI) in the region reached a record figure of $12.083 billion, registering an increase of 9.8% compared to 2016.When analyzing the period from 2010 to 2017, it can be seen that the inflow of FDI has increased considerably, showing a growth rate of 7.9%.
The 2017-2018 Guide by the Nicaraguan - German chamber of commerce provides details on tax exemption regimes by sector, requirements for foreign investors and other data.
It has been announced that the company Concentrix will be expanding its operations in Managua, where it has operated a call center since 2011.
The announcement was made by Vice President Rosario Murillo, who pointed out that the new Concentrix offices will be located in the IBW building, in downtown Managua.
"...Concentrix was established in Nicaragua in 2008 and in 2011 it established its first global contact center in Managua.This company has a presence in 25 countries with more than 70,000 employees who speak more than 40 languages."
British American Tobacco has announced that it will be investing $4.5 million in the construction of offices and a distribution center measuring 17 thousand square meters, which will start operating in June 2018.
The French automotive group Delfingen will be building a vehicle wire harness manufacturing plant, and its entry into operation is scheduled for the first quarter of 2018.
The 1,500 square meter factory will specialize in the manufacture of electrical protection solutions for automobiles.
The Costa Rican chain of stores Tiendas Universal inaugurated a 5 thousand square meter store in Managua, which will be offering 30,000 products for sale.
Elnuevodiario.com.ni reports that "...Roberto Federspiel, general manager of Universal stores, said on Friday in a presentation to the media that they decided to invest in Nicaragua in view of the good results that the country is achieving in its economic growth."
The Indian company Gravita Nicaragua has started operating its new plastic, aluminum and cardboard recycling plant in Managua.
Gravita Nicaragua, part of Grupo Gravita India Ltd, invested $2.2 million in setting up the recycling plant.The company processespolyethylene, cardboard and paper, aluminum, copper and bronzecontainers, among other things.
In 2016 44% of foreign direct investment in the region was concentrated in Panama, and a fourth consecutive year of increases was recorded, with 16%, while Costa Rica received 27% and increased by only 1.1%.
From chapter I of the report "Flows of FDI in Latin America and the Caribbean", by the ECLAC:
FDI into Central America grew by 3.7% in 2016 and totaled 11,833 million dollars.The increase in investments to the two main recipients of the subregion -Panama, which recieved 44%, and Costa Rica, 27%- compensated for the drop in FDI to the other Central American countries.
The company Mitsui may have told the Ortega administration that it is interested in participating in port infrastructure works in the country.
Representatives from the Japanese multinational firm Mitsui met in Managua yesterday with delegates from the state-run Investment Promotion Agency of Nicaragua (ProNicaragua) to discuss the possibility of investing in this country, an official source reported.
The US government has highlighted tax incentives and public-private sector dialogue, but warns that deficiencies in the rule of law, and extensive executive control can create significant challenges for those doing business in the country, particularly smaller foreign investors.
From the executive summary of the report "Investment Climate in Nicaragua 2017" by the US State Department:
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