In Nicaragua, following the arrests of political and business leaders, uncertainty has increased after local authorities arrested Luis Alberto Rivas Anduray, Executive President of Banpro.
In the last weeks Cristiana Chamorro, Arturo Cruz, Felix Maradiaga Blandon and Juan Sebastian Chamorro have been arrested, these people were presidential pre-candidates and are accused of multiple crimes.
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.
Over two years have passed since criminal groups invaded productive land in Nicaragua, and although there have been promises to restore the rights of the owners, up to date 29 properties remain taken.
In the context of the political and social crisis that erupted in the country in 2018, at the end of June of that year it was reported that at least ten private properties in Rivas, Matagalpa, Chinandega and Managua had been taken over by criminals.
With regard to the discussion of an initiative which aims to modify the Trademark Law in Nicaragua, the business sector believes that relevant changes are being considered in the area of legal security, as far as the protection of trade names is concerned.
Regarding the subject, the National Assembly reported that on February 27, "... the consultation process for the initiatives to reform the Trademark Law and the Patent Law was successfully concluded, with the participation of economic and academic agents directly linked to the subject, who provided important contributions."
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.
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.
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.
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 efforts made by the Ortega administration to attract more foreign investment were noted, but warnings were also give regarding deficiencies in the rule of law and an extensive executive control.
The report"Investment Climate Statements for 2016"prepared by the US State Department details the efforts made by Nicaragua to attract foreign investment by providing tax incentives to productive sectors such as mining and tourism, but also points out some elements that could affect the investment climate in the country, such as weak government institutions, deficiencies of law and an all-embracing control on the part of the executive branch.
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."
The Superior Council of Private Enterprise in Nicaragua has denounced the apparent illegality of the arrest of a tourism entrepreneur and the demolition of a $7 million hotel under construction in Ometepe.
From a statement issued by the Superior Council of Private Enterprise (COSEP):
The right to private property is inviolable
The Superior Council of Private Enterprise (COSEP), has been made aware of acts of governmental force which led to the arrest of businessman Milton Arcia and the total demolition of his property on the island of Ometepe, which were executed in an "arbitrary and illegal" manner affecting constitutional rights which are fundamental to the legal certainty required for national and international investment; a situation that can not go unnoticed and about which we want to present our union's institutional position: