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Latin America Investment News on Viva Tropical

Guatemala Peddles New Investment Incentives to Spur Economy

Article Summary:

Guatemala is preparing several legislation packages which will grant exemptions to exports, logistics and industrial parks in an attempt to spur more direct foreign investment.

Photo Credit: El Periodico

Original Article Text From El Periodico via Google Translate :

New incentives to Attract Investment

Generate 640 000 jobs in the private sector, and achieve a growth of Gross Domestic Product (GDP) of over 4.5 per cent per annum, is the goal that has raised the economic program of President Otto Perez Molina.

To achieve this, the Government and business representatives discussed a number of measures and laws to attract more foreign investment, which would include tax incentives for new generation (tax exemptions).

Perez hopes that in 2012 Guatemala will attract U.S. $ 1 billion in Foreign Direct Investment and growth of 4.5 percent of GDP, “is a growth that has a logical sequence,” the president.

This sequence begins with a new set of laws, by Sergio de la Torre, Minister of Economy, will be submitted to Congress within six weeks, which includes the law of Investment Incentives, Employment and Productivity, Competition Education Inclusion and Microfinance.

According to De La Torre, this law of Investment Incentives provides tax exemptions for export, logistics and infrastructure investment, “as industrial parks” similar to the Maquila Decree Law 20-89 and Free Zones, which allows exemption Income Tax (ISR) to these companies for 10 years renewable, which, in the opinion of economists, costing the treasury a million a year and Q100 Q989 million for exemptions to the maquilas.

“This new law is no cost to the treasury, because it would give extra tax revenue it would create jobs … maquilas and boost the economy have been achieved had it not been that law these companies would not be here and would no longer receive these jobs. This produces for export, “says De la Torre.

Employment generation
Juan Carlos Paiz, director of the National Programme for Competitiveness (Pronacom), emphasizes that the sectors of agriculture, apparel, textiles and footwear, tourism, technology and telecommunications (call centers), light manufacturing, processed foods, beverages, pharmaceuticals, chemicals and plastics, have the potential to generate about 640 thousand jobs during the current administration.

Perez Molina said that if these sectors are well taken care could create 150,000 to 200,000 jobs a year, “there is no responsibility of government but the government can facilitate the growth we seek,” he said.

The goal proposed by Perez Molina is slightly less than 700 000 jobs promised his predecessor, Alvaro Colom, and could not fulfill.

“You have to be skeptical”
To Paulo de León, consultant Central American Business Intelligence (CABI), the plan is to generate fast reverse, however, even if it is concrete and will not impact this year will be very difficult to generate higher economic growth in the short term.

“We keep an estimate between 2.4 and 2.9 percent growth of GDP and we have not altered, most likely will not change, the plan sounds good and if you get to run the effect will not be this year but for the next, the dice are thrown, “says De Leon.

The consultant says that it must review the plan of government, what their investment flows, the new real projects, estimates by sector and which are involved, how much actual labor will be generated. “Always be skeptical,” says the analyst.

Link to Original Article:

From El Periodico

Latin America Investment News on Viva Tropical