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El Salvador: Latin Star

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An open business environment and little corruption have made El Salvador one of Latin America's most attractive places for business.

BY CHRONICLE STAFF

Bobbi Dangerfield is bullish on El Salvador. The general manager for Dell El Salvador uses the Central American country as a base for supervising more than 1,300 employees in Latin America and the United States in sales and technical support for the U.S. company, the worlds largest direct-sale PC vendor and overall second-largest PC vendor.

"El Salvador is becoming a business center in the region," she says. "The construction of Puerto Cutuco and the growing investment in renewable energy projects – such as the third unit of geothermal energy in Berlin – are positioning the country as a regional leader for initiatives that bring economic benefits: attract foreign investment, create sustainable employment sources and help to foster respect for the environment. Besides, if the economy maintains its current stability, El Salvador will remain a great candidate for doing business."

Puerto Cutuco (also known as Puerto La Union) is undergoing a major expansion and aims to become the largest port in Central America. The ongoing integration of the Central American countries and the recent implementation of the U.S.-Central America free trade agreement known as CAFTA is also a benefit, Dangerfield argues. "This compels the nations to create, modify and execute incentives such as the Law of Services, in which Dell’s operation would be included," she says.

Armando Arias, Managing Partner of Central American law firm Arias & Munoz, agrees. "A lot of new opportunities have been generated [by CAFTA] in different sectors of the economy," he says. "Locals and foreigners alike have established new business in El Salvador to export to the U.S."

DIVERSIFYING TRADE

And El Salvador is not limiting itself to the United States. On Saturday, the legislature approved a free trade agreement with Taiwan that had been signed in May.  "The accord is a significant step for the Central American countries in their search for market opportunities across the world," U.S.-based consultancy Global Insight said recently.

And two days before the Taiwan ratification, Saca signed a free trade agreement with Colombia, which will allow around 75 percent of goods to enter the participating territories tariff free. "Political will has been evident at presidential level with the agreement finalized in less than a year," Global Insight said last week. "Their respective administrations and legislatures are generally in favor of such pacts, which [bode] well for the ratification of a deal with Colombia."

El Salvador and the rest of Central America is also set to start formal negotiations later this fall with the European Union for a free trade agreement.

The open trade environment comes on top of a sound macro economy, with stable GDP growth and declining inflation.  "While other countries are struggling to contain inflationary pressures, El Salvador’s consumer price increases have gradually declined over the past few months," Bear Stearns analyst Franco Uccelli said recently. "We view low inflation in El Salvador as an encouraging sign of macroeconomic stability in the country."

FREE AND COMPETITIVE

Dell isnt the only foreign investor that has faith in El Salvador. Citigroup paid $1.5 billion in 2006 to acquire Banco Cuscatlan, a Salvador-based bank...



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