El Salvador Economic Overview & Business Opportunities
Geographically, it may be the smallest country in Central America. However, don’t let that fool you, because El Salvador is a country which is still ripe with opportunities and possibilities. Despite its small size for one thing, El Salvador is the fourth largest economy in the region. Strategically located between South and North America, El Salvador has a promising economic overview and business opportunities for investors who are keen to establish a business in the region.
El Salvador’s Economic Overview
El Salvador was the first country in 2006 to ratify the Central American – Dominican Republic Free Trade Agreement (CAFTA-DR). This was a big deal for the country, because it helped to significantly boost the export of processed foods, sugar and ethanol, thereby boosting the country’s GDP growth in the process. It also means that US companies who were exporting to El Salvador could do so with zero percent duties on consumer and industrial goods.
The CAFTA-DR agreement has dramatically contributed and increased bilateral trade relations between the US and El Salvador, as well as trade throughout the region. Additionally, El Salvador has also undergone a lot of change over the last two decades, especially economically. With the US dollar as its legal tender, the country has over the years, proven that its macroeconomic stability is something which can be relied upon.
The government has also worked hard to make El Salvador enticing to investors who wish to set up a business here by adopting an open approach when it comes to global trade and investment. Trade especially, is significant for the country’s economy because the combined value of both its imports and export account for 64% of the country’s GDP growth rate. The government has made every effort to ensure that its policies don’t significantly interfere with foreign investment to ensure that investors will always be looking to this region for business opportunities.
El Salvador has an economy which is predominantly services-based, with agriculture accounting for 10% approximately of its GDP growth. Manufacturing and industry also accounts for 25% of the GDP growth, while the services sector then accounts for approximately 65%. The country also continues to receive strong support from the US government and other international organizations, such as the Alliance for Prosperity for example, which is a joint effort alliance between Guatemala, El Salvador and Honduras to promote security and good governance between these countries.
El Salvador’s Business Opportunities
Thanks to the CAFTA-DR agreement, El Salvador is home to a growing market for goods and services from the US especially. These US-based companies have the potential to increase their exports as a result, not just within El Salvador but also to the rest of Central America because of the strategic location.
Forming a company in El Salvador is also relatively easy. As long as you have two shareholders (with one of the shareholders being appointed as the director of the company), you can incorporate a company in El Salvador with all your paperwork in order.
Another promising aspects of the business opportunities in El Salvador are the free zones which have been setup to allow foreigners who own manufacturing companies to be free from being taxed on their corporate income. VAT taxes are not imposed on products with are being sold overseas either, and there are no foreign-trade operations restrictions imposed on the country. There’s no restrictions on foreign currency transactions either.
Explore Opportunities in El Salvador with the 3E Accounting Team
At 3E Accounting, our team of experts understand what a challenging thing it can be to setup a company in a foreign country. With years of experience in the field, there is no one better to guide you through the process of incorporating a company in El Salvador than 3E Accounting. Contact us today or visit our website for more information on exploring opportunities in El Salvador.
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