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Issue: Jan 2006


Focus on Guatemala



AI interviews Rodolfo Batres, general manager of Invest in Guatemala to discuss manufacturing opportunities in this dynamic region

by John Larkin

Automotive Industries speaks to Rodolfo Batres, general manager of Invest in Guatemala to discuss manufacturing opportunities in this dynamic region, with a growing skilled and well trained youthful workforce, supported by excellent ongoing training programs to PHD, also offering strong incentives to attract foreign investors, logistically well placed to support the growing market potential post CAFTA

Guatemalan businesses believe that competitive industries must respond swiftly to change to be able to satisfy their clients' and final consumers' requirements. On time delivery and proximity to the largest markets of the world are characteristics that help position Guatemala is one of the most attractive locations in Latin America for investment. Guatemalan labor is recognized worldwide for its ability and productivity. The commitment to export value added manufactured quality goods has been an especially noteworthy success in the textile industry, today known as the most productive and completely integrated cluster in Central America as well as in the world.

The growth of value added export products has resulted from, a skilled labor force and the largest Economically Active Population (EAP) in Central America. Guatemala offers one of the largest pools of young human resources and the most skilled labor force in the Central American region, making Guatemala an ideal destination for manufacturing and other labor intensive industries.

Automotive Industries (AI): What is the quality and training of the Guatemalan work force?

Batres: We have the youngest population in Central America. The Guatemalan work force is its most valued natural resource. The diversity and quality of its skilled labor force is one of the most important factors in this field. Guatemala possesses 33% of the entire Central American population between 15 and 44 years of age. The youth of the labor force implies energy and a desire to learn. In 2020 Guatemala will have the youngest labor force of Central America, guaranteeing investors skilled labor (and consumers) for the long term.

Nearly half the labor force enrolled in social security works in drawback industries, or maquila, and is dedicated to activities such as assembly, packing and other activities related to semi-automated and automated tasks. This is an industrial labor knowledge and skill bank on which investors can draw

The vast experience accumulated as a result of the success of the drawback businesses in Guatemala has given the workers the ability to assemble other products such as: Machinery and equipment, Electronics and Home appliances.

(AI): What technical institutes in Guatemala support and train the Guatemalan work force?

Batres: We understand a profitable industrial investment project requires: highly skilled labor, cost-efficient labor, and low ancillary costs of operation. Through the Technical Institute of Training and Productivity (INTECAP, Instituto Tecnico de Capacitacion), it is possible to train the human resource of an industry with a direct cost equivalent to 1% of payroll. The Institute graduates technical specialists in fields such as tourism, hotel management, metalworking, data processing, finance, textiles, call centers, telemarketing and telecommunications. In the industrial area, training is offered in several different fields: Textiles, Food , Wood, Leather and footwear , Graphic arts, Electricity, Metalworking

(AI): What economic incentives are in place for foreign investors?

Batres: To guarantee competitive cost structures, Guatemala offers incentives to investors, such as industrial parks that offer the following advantages:

Free Trade Zone law and Law for the Promotion and Development of Exports and Drawback Activities.
These laws offer the following economic incentives to foreign and national investors:

- 100% exemption from duties on imports and applicable charges for machinery, equipment, raw materials and others.

- 100% exemption, for a 10-year period, from income tax (ISR).

- 100% exemption from the value-added tax (VAT) within free zones and/or reimbursement of payment, in the case of drawbacks

- 100% exemption from the unified real estate tax (IUSI) for the companies operating free zones

Sales are permitted to the local market up to 20% . Unrestricted availability and free management of foreign currency

Presently, Guatemala participates in and enjoys the benefits of several free trade agreements that provide access to important markets, including

- Caribbean Basin Initiative (CBI)

- Generalized System of Preference (GSP) with the European Union

- The Central American Economic Integration Agreement.

- Free Trade Agreement Guatemala, El Salvador and Honduras (CA3) with Mexico

- Free Trade Agreement Central America - Dominican Republic

- Partial Purview Agreement Guatemala - Cuba

- Preferential Exchange Agreement Guatemala - Panama

- More information on Investing in Guatemala can be found at http://www.investinguatemala.org


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Comments:
Have any automotive OEM suppliers settled operations in Guatemala and who they are?
We are looking for expanding our regional supplier base for our operations in Mexico and are willing to learn what opportunities are in Guatemala.
Francisco Cuadros, Nissan Mexico , Toluca, Mexico