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Latin America Investment News on Viva Tropical

The Deadest Economic Sector in El Salvador

Article Summary:

Lack of private sector confidence in the government and excessive bureaucracy prevented greater investments from being made in this industry during 2013.

Photo Credit: Wikipedia

Original Article Text From El Salvador via Google Translate :

The construction industry closed 2013 with stagnation

A year of stagnation. That is the rating that the construction industry gives 2013 when it is estimated that GDP (Gross Domestic Product) of the sector will be zero percent, although last year closed -2.4 %.

The projection is based behavior estimated annual GDP of the sector , which until October this year was below zero percent.

For industry is bad news because the industry GDP will be located below the national GDP, which is estimated to be around 1.6 %, according to economic analysts.

“We closed a year without any growth,” confirmed Carlos Guerrero , president of the Salvadoran Chamber of Construction Industry ( Casalco ).

In his opinion the stagnation is due to low economic growth that the country has registered in the last five years, as well as the low level of investment in housing projects because of the lack of confidence that the government has created in the private sector. Bureaucracy and red tape of building permits have also slowed the implementation of real estate projects.

The sector is characterized by labor- intensive, but it is very dependent on the trust investments, because they are projects in the medium and long term, ” in which this government has not been very successful.”

” We know there are no magic bullets , what you have to do is build trust so that there is economic growth . Confidence becomes imperative for the private sector to invest ,” said Guerrero.

The analyst Luis Membreño confirmed yesterday during his analysis of the economic situation, and what could be expected by 2014 , the sector’s growth will be negative , which can be seen in the apparent consumption of cement was reduced 3 % until August this year and the decline in employment, which rose from 24.648 to 24.593 last year between September and December 2013.

Another concern, according Membreño, is the behavior of credit, which continues to occupy a very small percentage in the credit structure of the local banking system, it does not exceed 2%.

In fact, the category status report prepared by the Center for Information and Study Casalco credit for home construction rose from 37.10 million to 22.80 million, a decrease of 38.5 % provided in the aforementioned period.

Undoubtedly, the lack of funding has been one of the factors that have slowed the industry performance , as has been limited to the time of executing the real estate developments.

However, it is noteworthy that the loans for home purchases rose 17.5 % from 233.16 million to 273.96 million dollars.

This does not even happy to builders , because they have not reached the levels of credit that were recorded before 2008. The 10,000 jobs lost in this year of crisis not have recovered.

Despite the slump , the industry is optimistic because 2014 will be a key year for the country because Salvadorans elect their future ruler .

Positivism is also based on the recently enacted Act Streamlining Procedures for Construction Projects , which reduce the time waiting for permission, as these currently take up to three years.

The union hopes that the law takes effect next year, as it is within 60 days that the law gives effect to copper.

But the builders said to complement the progress is needed in addition to other instruments such as the Preferential Interest Law , which proposes that the State support to low-income families in the purchase of your home are approved. With this tool expect the housing deficit is reduced.

For next year , Casalco also expected that a technical legal analysis , constitutional and is made to amend the Law on Procurement of Public Administration ( LACAP ) .

Among his proposals also include the creation of a special law of public infrastructure contracts, to establish a more efficient at executing projects system.

The union stressed that the construction sector contributes between 40 % to 43 % of the investment of the country, which is considered one of the engines of growth .

Also Casalco considered important that the future Government agrees to establish mechanisms for energizing not only the construction sector, but all sectors of the country .

Link to Original Article:

From El Salvador

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