Why invest in El Salvador? Discover it at PROESA's Country Presentation

1. Export and Investment Promotion Agency
El SalvadorA country of opportunities
February 2015

2. 2
El Salvador
Ahuachapán
Santa
Ana
Chalatenango
Sonsonate San
Vicente
Cabañas
La Paz
La
Libertad
San
Salvador
Usulután
San
Miguel
Morazán
La
Unión
Gulf of
Fonseca
islands
Capital San Salvador
Official Language Spanish
Area 21,041 Km2 / 8,124 sq mi
Population 6.3 million (2013)
GDP Nominal 24.5 billion USD (2013)
Currency USD
Time Zone UTC -6
El Salvador

3. 3
• Solid economic environment
• International view of El Salvador
• Commercial openness & strategic location
• Investment Opportunities in El Salvador
El Salvador

4. 4
CentralAmerican Market
Country
EL SALVADOR GUATEMALA HONDURAS NICARAGUA COSTA RICA PANAMA
Central
America
Capital San Salvador Guatemala City Tegucigalpa Managua San Jose Panama City
Official Language Spanish Spanish Spanish Spanish Spanish Spanish
Area (‘000 Km2) 21.0 108.9 112.1 130.4 51.1 75.4 498.9
Population (‘000,000) 6.3 16.3 8.4 6.3 4.8 3.9 46.0
GDP PPP 2015
(Bn USD)
52.8 125.3 40.9 31.6 75.1 83.4 409.1
GDP per capita PPP (USD) 8,276 7,704 4,849 5,019 15,534 21,635 8,874
Average inflation rate
2010-2014
2.2% 4.7% 5.8% 7.3% 4.9% 4.5% 4.9%
Currency
Dollar
USD
Quetzal
GTQ
Lempira
HNL
Cordoba
NIO
Colon
SJC
Dollar
USD
Time Zone UTC -6 UTC -6 UTC -6 UTC -6 UTC -6 UTC -5
Source: Multi –Purpose Household Survey,
Central Reserve Banks, and IMF.
70% of the population and commerce
concentrates in ES, GT, and HN.

5. 5
Employer Obligations Description
Monthly
Percentage
Social Security (ISSS)
The employer pays an amount equivalent to 7.5% of the base salary.
For the calculation of this contribution, a maximum of USD 685.71 will be
considered as base salary.
7.50%
Retirement Fund
(AFP)
The employer contributes with 6.75% of the base salary. 6.75%
Christmas Bonus
Paid annually in December (it is not necessary to make a monthly
provision). The amount is calculated according to the number of years
served: 1-3 years (15 days salary), 3-10 years (19 days salary), 10 years
or more (21 days salary).
4.17%
Annual paid vacations
Vacations are paid once per year and correspond to 30% of a 15-day
salary.
1.25%
Training Fund (INSAFORP)
Applicable only to companies with 10 or more employees. The employer
pays an amount equivalent to 1% of the base salary.
1.00%
Total benefits paid by employer: 20.67%
Compensation for voluntary
resignation
This compensation is due in the case of voluntary resignation from the
employee. The law does not obligates to maintain a reserve to pay this
compensation, but it does mandates it shall be paid in the case of voluntary
resignation of an employee that has at least two continuous years of service
for the same employer. For managers, department heads and specialized
workers to have right to this compensation, it is an obligation, that such
employees give the employer a 30 days written notice. All other employees
may give written notice 15 days in advance. 15 days of salary will be paid for
every year of service. For effects of calculating the payment, no base salary
may be higher than two times the minimum salary in effect.
4.17%
Compensation for unjustified
dismissal
This provision is used in case of an unjustified dismissal. Thirty days will
be paid for each year of service provided, and proportionally for fractions
of a working year. To calculate compensation, no salary will be greater
than four times the current minimum wage. The law does not require
companies to maintain this provision, but obliges payment in case of
unjustified dismissals.
8.33%
Total benefits paid by employer + compensation for unjustified dismissal: 29.00%
Sector
Monthly
Minimum
Wage*
Daily Wage
Agriculture $ 118.20 $ 3.94
Maquila $ 210.90 $ 7.03
Industry $ 246.60 $ 8.22
Commerce &
Services
$ 251.70 $ 8.39
* Effectivesince January 2015
Source: Ministry of Labor El Salvador
Minimum wage by sector
Fringe benefits
represent 20.67% of nominal wage

6. M 23.7
F 26.6
EAP: 2,795,156
years
Young Population
Average Age
(Estimates)
Source: Multi-Purpose Household Survey 2013, CIA World Factbook
6
0.0% 10.0% 20.0%
0 - 4
5 - 9
10 - 14
15 - 19
20 - 24
25 - 29
30 - 34
35 - 39
40 - 44
45 - 49
50 - 54
55 - 59
60 - 64
65 - 69
>= 70
Female
52.6%
0.0%10.0%20.0%
Male
47.4%
30.0
28.3
25.6
24.2
21.9
21.0
0 10 20 30
Costa Rica
Panamá
El Salvador
Nicaragua
Honduras
Guatemala

7. 7
El Salvador
• Solid political & economic environment
• International view of El Salvador
• Commercial openness & strategic location
• Investment Opportunities in El Salvador

8. 8
InternationalviewofElSalvador
Index
El Salvador Guatemala Honduras Nicaragua Costa Rica Panama
Human Development Index
(2014)
115 125 129 132 68 65
Index of Economic Freedom
(2015)
62 87 116 108 51 68
Ease of Doing Business (2015) 109 73 104 119 83 52
Freedom in the World
(2014)
Free
Partially
Free
Partially Free Partially Free Free Free
Global Competitiveness Report
(2014-2015)
• Global Competitiveness
• Procedures to start a business
• Infrastructure
• Roads
• Airports
• Mobile Telephones
• Taxes
• Goods market efficiency
• Business Sophistication
• Innovation
84
93
58
47
47
36
72
55
37
51
78
57
60
78
83
32
85
45
52
95
100
135
106
96
93
100
74
91
64
74
99
78
114
88
103
71
133
125
129
123
51
106
103
119
61
27
125
52
32
34
48
32
39
44
7
10
81
41
54
40

9. 9
El Salvador
• Solid political & economic environment
• International view of El Salvador
• Commercial openness & strategic location
• Investment Opportunities in El Salvador

10. 10
Legal Framework
Investment
Law
International
Services Law
Tourism Law
Free Zones
Law
• Equal treatment to national & international
investors
• Liberty to transfer funds and profits abroad
• Access to local financing
• Incentives to strategic sectors (contact centers, BPO’s,
maintenance and repair of airplanes, logistics, etc.)
• Total permanent tax exemptions (income and
municipal taxes) and import duties.
• Incentives to industrial activities
• Tax exemptions (income, municipal taxes and
real estate transfers) and import duties.
• Requires minimum of USD 25,000 investment
• Corporate tax exemption (income and
municipal)
• Real estate transfer and import tax exemptions

11. 11
Legal Framework
Renewable
Energy
Incentives Law
• Customs duties exemption on imports of machinery,
equipment and materials
• Income tax exemption for a period of 5 to 10 years
• Total tax exemption on revenues from the sale of Certified
Emission Reductions
Construction
Projects
Procedure
Streamlining Law
• Creation of a One-Stop-Office for the reception and processing
of construction and land fragmentation project applications.
• Development of a centralized computer system to track
applications.
• Publication of updated information about requirements,
administrative procedures, criteria and environmental and
cultural zoning.
• Procedure streamlining (if a public authority does not resolve
within the established deadlines, it shall be understood that the
resolution has been issued in favor of the applicant).

12. PPP Law
• The minimum investment to qualify for a PPP project is 45
thousand times the trade and services minimum wage
• Three forms of investment or types of contracts
• The PPP figure in El Salvador only involves the granting of public
infrastructure or public services
• The law regulates the process for project structuring
Law of Legal
Stability for
Investments
• This law guarantees legal certainty to investors on taxes,
customs and immigration issues through Legal Stability
Contracts.
• Individuals and legal entities -national or foreign- with new
investment projects or the expansion of existing investments
within the following eligible activities may benefit from this law:
aeronautics, agroindustry, aquiculture, electronics, energy,
strategic infrastructure, logistics, health services, offshore
business services, tourism, telecommunications, light
manufacturing and science and technology.
• To be eligible for these benefits investor’s shall comply with the
requisites stated in this law, among which is the commitment to
invest an amount on fixed assets greater than or equal to four
thousand two hundred and twenty times the industry minimum
wage (USD 246.60). This is equal to USD 1,040,652 in new
investment projects or the expansion of existing investments.
Legal Framework

13. 13
CommercialOpenness Access to a potential market of
1.2 billion people

14. Main Trade
Partners*
Main Export Products*
Source: Central Reserve Bank
MainTradePartners and Export Products
El Salvador Exports 2014
(goods)
USD 5.3 billion
14
*The trade partners and export products´
share are calculated as a percentage of total
goods exports (including maquila).
United States
46%
Central America
38%
Panama
3%
Dominican
Republic
2%
Spain
1%
Mexico
1%
Canada
1%
South Korea
1%
Netherlands
1%
Other
6%
Apparel
40%
Agroindustry
12%
Food and
beverages
7%
Plastics and
rubber
6%
Machinery and
mechanical
products
6%
Paper products
6%
Textiles
5%
Chemical
products
5%
Metal-mechanic
Industry
5% Mineral products
3%
Others
5%

15. Main airlines serving
El Salvador
Strategic
Location
Main Freight Companies
Air Cargo
• DHL
• UPS
• Arrow
Regular charter
flights
Maritime
• MAERSK
• CROWLEY
• MSC
• SEABOARD
• NIPPON
• CSAV
• APL
• Hamburg Süd
Close to key markets
• Closeness to the vital maritime
routes.
• A natural bi-oceanic logistics
corridor.
• Container terminal ready for
post panamax ships.
• A dominant airport certified A1
by the FAA linking important
cities.
• Direct flights to 32 different
destinations and excellent air
traffic connections.
(Montreal, Toronto)
15

16. Strategic Location

17. Strategic
Location

18. Foreign Direct Investment
Stock 2013 USD 8.2 billion (34% of GDP)
18

19. Investment Opportunities
19
Specialized textiles
and Apparel
Aeronautics Offshore Business
Services
Tourism
Agroindustry
Energy
Light
Manufacturing

20. El Salvador offers an aircraft
maintenance, repair and
overhaul (MRO) industry for
commercial aircraft, which
has successfully placed the
country on the global aviation
map.
The successful operations of
Aeroman are widely
recognized within the
emerging Latin American
aeronautical clusters.
Aeronautics
Compliance with international certifications ensuring the
highest quality required in aircraft maintenance services.
20

21. El Salvador:
Quality in aircraft maintenance services
 Technical Universities and Institutes have specialized
curricula developed in conjunction with the private enterprise
to ensure the availability of skilled labor.
 In addition to maintenance services for commercial aircraft, a
variety of other companies in the emerging aerospace
clusters offer the following services:
• R44 helicopter and corporate airplane maintenance.
• Distribution and warehousing services for aircraft
parts.
• Component maintenance shops.
• Ground Services.
• Light sports aircraft (LSA) airframe, wing tip, and
engine part manufacturing in composite materials,
etc.
• Aircraft harness system assembly.
• Refurbishment on older Light Sports Aircraft (LSA)
models.
 A Free Trade Zone Law and an International Services Law
which provides tax incentives to these types of industries
 Available land for the development of industrial operations
next door to the International Airport of El Salvador, under
Public Private Partnership (PPP) mode.
Investment Opportunities in Aeronautics:
• Commercial aircraft maintenance service operations.
• R44 helicopter maintenance operations.
• Light Sports Aircraft (LSA) airframe part manufacturing.
• Painting and maintenance of commercial aircraft interiors.
21

22. For investors in agro industry and
entrepreneurs who seek a platform
to produce and export, El Salvador
offers attractive opportunities in the
following sectors:
• Fruit Farming
• Aquaculture
• Ornamental plant farming
• Food & Beverages
These sectors are highly favored by
good weather and easy access to
regional and international markets.
Agroindustry
Climate, tax incentives and a platform connected
to additional markets.
22

23. El Salvador:
A production and export platform
• El Salvador possesses suitable climatic and soil conditions
for fruit and ornamental plant farming.
• Suitable soil and climatic conditions for the production of a
wide variety of tropical fruits.
• The country has optimal interconnections for the trade and
transport of agro industrial products.
• Availability of water resources for the sustainable
development of aquaculture.
• Negotiated trade agreements open the possibility for the
sector to expand to regional and international markets.
• Competitive labor costs.
Investment Opportunities in Agro Industry:
• Aquaculture Sector: Development of the production chain through the supply of young fingerlings, feed and other inputs to attain
productivity and quality of aqua cultured products.
• Fruit Farming Sector: Development of supporting industries for the provision of supplies, equipment, quality vegetative materials and
processing technology for the expansion of crops of avocado, Persian lime, coconut and organic products.
• Processed Foods Sector: Opportunities in the development of complementary industries in a sector in continuous growth in areas
such as: packaging, process technology, machinery and equipment. 23

24. El Salvador
Hub Energético y de Gas Natural
para la región CentroAmericana
24
El Salvador offers an attractive platform
of investment in the energy sector:
• Market based on production costs
• Bids based on long-term contracts
• Investment opportunities in
renewable energy
• Clear rules under a legal framework
that promotes the diversification of
our energy matrix, at small and
large scale
• Attractive tax incentives for
renewable energy investments
• First country in Central America
that will include LNG as fuel
resource in its energy matrix.
Success story: First power plant of 355
MW of Natural Gas-based power
generation.
Energy
El Salvador
Energy and LNG Hub for the Central America Region

25. El Salvador:
Energy and Natural Gas hub for the Central American region
Installed capacity 1,547 MVA
Hydro: 31 % / Geo: 13 % / Thermal (oil-based):
49 %
Biomass: 7%
Annual projected growth demand: 3.6 %
National Energy policy:
Oriented to diversify our current energy matrix, by
developing and promoting renewable energies,
and thus eliminate the dependence on
petroleum-based thermal generation and
strengthen the Central American energy
integration.
Available renewable resources:
Wind, PV Solar and Thermal Solar, Geothermal,
small hydroelectric power plants, Biogas, Biomass.
Diversification oriented to:
Natural gas, coal, and new technologies.
Existence of a tax incentives law for the promotion
of renewable energy
Technical team of governmental inter-agency work
in support of renewable energy investment.
Electrical system network with installed capacity
for strong expansions, SIEPAC Central American
Electrical interconnection Grid with a transmission
capacity of 300 MW.
Available land available at Puerto La Unión.
Master Plan for the development of renewable
energy
Investment opportunities in energy:
• Bids based on long term contracts of up to 20 years
• High potential for distributed generation projects
• Potential in renewable natural resources:
Hydroelectric: Projects less than 20 MW: 157 MW; Projects greater than 20 MW: 2,000 MW
Biomass: 50 MW; Wind power: 72 MW; Geothermal : 330 - 400 MW;
Solar photovoltaic : 5 Kwh/m2 or 6 hours sun

26. International light
manufacturing companies
will find in El Salvador a
strategic partner to be used
as a platform for export to
markets in North America,
Central America and the
Caribbean.
Light Manufacturing
Strategic location, high productivity and quality at competitive costs
26

27. El Salvador:
A strategic partner in light manufacturing
• Strategic location in the center of the Americas to be
used as a logistics platform
• Free trade agreements with major markets
• Free Zone Law offers tax incentives to this type of
manufacturing.
• Wide local supply chain in place in the areas of
metalworking, plastics, support systems, automation
systems, engineering, chemicals, among others.
• Low operating costs
• Highly-qualified human capital
Investment Opportunities in light manufacturing:
• Auto parts (harnesses, safety belts, inflators and modulators for airbags, shock absorbers, brake drums & rotors, etc.)
• Medical devices (medical supplies, orthopedic products, hospital furniture, etc.)
• Passive electronic components
• El Salvador offers a successful platform for electronic component manufacturing, with over 30 years of proven credibility. The
country has experience in the manufacture of ceramic and tantalum capacitors in compliance with required international
standards.
• Footwear (assembly of components and parts, manufacturing of inputs, components and accessories and footwear manufacturing.)
The CAFTA- DR rule of origin granted by the United States is more flexible than in any other free trade agreement. The simply
assembly in the country confers origin which allows most footwear categories to enter the U.S market tariff- free and quota-free,
regardless the incorporation of prefabricated components from third countries, as long a the products are assembled in El Salvador.
27

28. For offshore business service firms
seeking to enter markets in the U.S. and
Spanish-speaking countries, El Salvador
is a strategic partner for providing quality
multi-region business services.
Our dynamic business environment,
strategic location for near-shoring, time-
zone complementarity and the
outstanding performance of our bilingual
human resources (English/Spanish),
makes us a strategic platform for
companies offering global services.
The modern and advanced local
telecommunications infrastructure
ensures the delivery of quality services
and cost-effective location for this
industry.
Offshore Business Services
Cost effective near-shore location, based on a state of the art
telecommunications platform which guarantees your global offer.
28

29. El Salvador:
Complementary strategic partner for multi-region operations
• Strategic location in relation to English- and Spanish-
speaking customers (shorter flight times from North and
South America).
• Same time zone for primary customers (U.S. and Canada)
and Spanish-speaking markets (91% of the global
Spanish-speaking population).
• Time-zone complementarity for customers in Europe and
Asia (24/7 possibility).
• Friendly, hardworking and service-oriented people with
neutral English and Spanish accents.
• Exceptional performance against key indicators (KPIs)
such as Sales, C-Sat, FCR, etc.
• Complementary service to other geographical areas and
high-end front-office services.
• Young and committed workforce (60% of the population
under 35 years).
• Cultural affinity of the workforce with priority markets.
Investment Opportunities in Offshore Business Services:
• Voice Business Process Outsourcing (Call Centers)
• Non-voice Business Processes Outsourcing (BPOs)
• Shared Service Centers (KPOs)
29

30. El Salvador offers attractive
investment opportunities to
specialized textile and clothing
companies wishing to enter the
regional Central and North American
markets based on the favorable tariff
conditions of FTAs with the U.S.
(CAFTA) and the European Union.
El Salvador offers a vertically
integrated industry, which promotes
a competitive high-fashion, high-
turnover garment manufacturing
industry.
Specialized Textiles and Apparel
Vertically integrated industry with easy access to markets
30

31. El Salvador:
Specialized textile and apparel sector environment
• More than 260 textile and apparel companies have
established themselves in the country, including internationally
recognized companies such as Pettenati, George C. Moore,
UNIFI, Swisstex, CS America andAPS.
• The rule of origin granted by the CAFTA-DR Free Trade
Agreement allows free access for textiles manufactured in the
region with yarn produced in Central America.
• A cluster of companies that use synthetic fibers (nylon,
polyester, micro fiber, among others –products paying a 32%
tariff when imported from Asia through the U.S.) is in the
process of consolidation.
• The country offers a wide variety of services, including
embroidery, industrial laundry, dyeing and finishing, cutting
and packing, which have been a great support to the
manufacturing operations of companies such as HBI, Fruit of
the Loom, Adidas and Lacoste, among others.
• The evolution of the manufacturing scheme from "maquila" to
"full package" has developed the supply chain through
materials distribution centers, required for vertical integration
and sustainability of the industry.
Investment Opportunities in Specialized Textiles and Apparel:
• Manufacture of yarn and fabrics.
• Manufacture of knitted garments with accessories and embellishments (embroidery, screen printing, heat transfers, etc.).
• Manufacture of garments included in the “Single Transformation” category: bras, girl dresses, boxer shorts, sleepwear and luggage.
31

32. El Salvador offers attractive tourism
projects in various stages of
development that take advantage of a
wide array of attractions located close to
each other (surf spots, beaches,
mountains, lakes, volcanoes).
The country has a historical past
inherited from the Maya, a pleasant
climate all year round, competitive
pricing of land, low construction costs
and proximity to important markets of
origin of international tourism.
Tourism
Surf, fishing, adventure tourism, the Mayan
world and medical tourism ... all in one place.
32

33. El Salvador:
Variety of touristic attractions, strategic location and excellent conectivity
• Solid and ever increasing tourist demand
• Political stability
• Healthy and completely dolarized economy
• Flight hub with traffic of more than 470 weekly departures
and arrivals
• Quality labor force,with true commitment to service
• Nice weather during the whole year
• Attractive package of tax incentives guaranteed by the
Law on Tourism and the International Services Law
• Medical Doctors with postgraduate degrees abroad
• Availability of human resource with approximately 12, 000
doctors.
• Health services are provided at costs that are significantly
lower than in the United States and Canada.
Investment Opportunities in Tourism:
• Mixed-use developments .
• Hotels: Urban, Resort, Boutique, Bed & Breakfast, Eco-lodge, Hostels.
• Vacation homes.
• Properties with tourism potential
• Marinas
33
Investment Opportunities in Health
Services:
• Hospitals
• Specialized clinics
• Rehabilitation Centers.
• “Medical Spas”.
• “Resort Hospitals” for cronic diseases.

34.  Information on investment opportunities in strategic industries, as well
as of the incentives and investment advantages of those industries.
 Statistics and customized industry information.
Business
opportunities
 Organization, logistics and coordination of tailored agendas for visits to
El Salvador.
 Specialized support before, during and after the investment.
 Assistance to potential investors in the generation of local business
contacts.
 Comprehensive support in procedures required to establish or expand
business operations in the country.
Advisoryand
technical
assistance
Services provided to investors
Strategic
information
 Information on set-up and operational costs, regulations, availability of
human capital, business climate and any other information required in
the country evaluation process.
 Personalized attention to specific enquiries.
34

35. www.proesa.gob.sv
@Proesa_sv
info@proesa.gob.sv
+503 2592 - 7000
PROESA El Salvador