Official websites use .gov
On June 1, 2019, President Nayib Bukele assumed office. His administration immediately pledged to eliminate cumbersome bureaucracy and improve security conditions to attract investment and create jobs. Early accomplishments included increased dialogue with the private sector and reduced homicide rates, which increased business confidence. El Salvador and the United States signed a Growth in the Americas memorandum of understanding in January 2020 to promote private investment. The COVID-19 pandemic has unfortunately complicated implementation of reforms and dampened investment.
Commonly cited challenges to doing business in El Salvador include the discretionary application of laws and regulations, lengthy and unpredictable permitting procedures, as well as customs delays. In recent years, El Salvador has lagged its regional peers in attracting foreign direct investment (FDI). The sectors with the largest investment have historically been textiles and retail establishments, though investment in energy has increased in recent years.
As a small energy-dependent country with no Atlantic coast, El Salvador relies on free trade. It is a member of the Central American Dominican Republic Free Trade Agreement (CAFTA-DR) and the United States is El Salvador''s top trading partner. Proximity to the U.S. market is a competitive advantage for El Salvador. As most Salvadoran exports travel by land to Guatemalan and Honduran ports, regional integration is crucial for competitiveness. Although El Salvador officially joined the Customs Union established by Guatemala and Honduras in 2018, the Bukele administration announced in January 2020 that it would prioritize bilateral trade facilitation with Guatemala.
The Bukele administration has taken initial steps to facilitate trade – a major priority of the textile, retail, and other U.S. companies invested in El Salvador. In July 2019, the government of El Salvador (GOES) relaunched the National Trade Facilitation Committee (NTFC), which had not met since its creation in 2017. The NTFC produced the first jointly developed private-public action plan to reduce trade barriers. The plan contains 60 strategic measures focused on simplifying procedures, reducing trade costs, and improving connectivity and border infrastructure. Companies are hopeful the plan would help reduce costs and make El Salvador more attractive for further investment.
Policies Toward Foreign Direct Investment
The GOES recognizes that attracting FDI is crucial to improving the economy. El Salvador does not have laws or practices that discriminate against foreign investors. The GOES does not screen or prohibit FDI. However, FDI levels are still paltry and lag behind regional neighbors, except for Nicaragua. The Central Bank reported net FDI inflows of $437.7 million at the end of September 2019.
The Exports and Investment Promotion Agency of El Salvador (PROESA) supports investment in eight main sectors: textiles and apparel; business services; tourism; aeronautics; agro-industry; light manufacturing; logistic and infrastructure networks; and healthcare services. PROESA provides information for potential investors about applicable laws, regulations, procedures, and available incentives for doing business in El Salvador. Website:
The National Association of Private Enterprise (ANEP), El Salvador''s umbrella business/private sector organization, has established an ongoing dialogue with relevant GOES ministries.
In June 2019, the GOES created the Secretariat of Commerce and Investment, a position within the President''s Office responsible for the formulation of trade and investment policies, as well as coordinating the Economic Cabinet.
Limits on Foreign Control and Right to Private Ownership and Establishment
Foreign citizens and private companies can freely establish businesses in El Salvador.
No single natural or legal person – whether national or foreign – can own more than 245 hectares (605 acres) of land. The Salvadoran Constitution stipulates there is no restriction on foreign ownership of rural land in El Salvador, unless Salvadoran nationals face restrictions in the corresponding country. Rural land to be used for industrial purposes is not subject to the reciprocity requirement.
The 1999 Investments Law grants equal treatment to foreign and domestic investors. With the exception of limitations imposed on micro businesses, which are defined as having 10 or fewer employees and yearly sales of $121,319.40 or less, foreign investors may freely establish any type of domestic business. Investors who begin operations with 10 or fewer employees must present plans to increase employment to the Ministry of Economy''s National Investment Office.
The Investment Law provides that any extractive resource is the exclusive property of the state. The GOES may grant private concessions for resource extraction, though there have been no new permits issued in recent years.
Other Investment Policy Reviews
The latest investment policy review performed by the United Nations Conference on Trade and Development (UNCTAD) was in 2010.
El Salvador has various laws that promote and protect investments, as well as providing benefits to local and foreign investors. These include: the Investments Law, the International Services Law; the Free Trade Zones Law; the Tourism Law, the Renewable Energy Incentives Law; the Law on Public Private Partnerships; the Special Law for Streamlining Procedures for the Promotion of Construction Projects; and the Legal Stability Law for Investments.
Per the World Bank, registering a new business in El Salvador requires nine steps taking an average of 16.5 days. According to the World Bank''s 2020 Doing Business Report, El Salvador ranks 148 in the "Starting a Business" indicator. El Salvador launched an online business registration portal in 2017 designed to give entrepreneurs a one-stop shop for registering new companies. Specifically, the online business registration website allows new businesses the ability to formalize registration within three days and conduct administrative operations through the online platform. The portal (https://miempresa.gob.sv/ ) is available to all, though services are available only in Spanish.
The GOES'' Business Services Office (Oficina de Atención Empresarial) caters to entrepreneurs and investors. The office has two divisions: “Growing Your Business” (Crecemos Tu Empresa) and the National Investment Office (Dirección Nacional de Inversiones, DNI). "Growing Your Businesses" provides business advice, especially for micro-, small- and medium-sized enterprises. The DNI administers investment incentives and facilitates business registration.
The National Investment Office:
The Directorate for Coordination of Productive Policies at the Ministry of Economy focuses on five areas: Productive Development, Capacity Building, Trade Facilitation, Taxation, and Export Promotion. Website:
The Productive Development Fund (FONDEPRO) provides grants to small enterprises to strengthen competitiveness. Website:
The National Commission for Micro and Small Businesses (CONAMYPE) supports micro and small businesses by providing training, technical assistance, financing, venture capital, and loan guarantee programs. CONAMYPE also provides assistance on market access and export promotion, marketing, business registration, and the promotion of business ventures led by women and youth. Website: https://
The Micro and Small Businesses Promotion Law defines a microenterprise as a natural or legal person with annual gross sales up to 482 minimum monthly wages, equivalent to $146,609.94 and up to ten workers. A small business is defined as a natural or legal person with annual gross sales between 482 minimum monthly wages ($146,609.94) and 4,817 minimum monthly wages ($1,465,186.89) and up to 50 employees. To facilitate credit to small businesses, Salvadoran law allows for inventories, receivables, intellectual property rights, consumables, or any good with economic value to be used as collateral for loans.
El Salvador provides equitable treatment for women and under-represented minorities. The GOES does not provide targeted assistance to under-represented minorities. CONAMYPE provides specialized counseling to female entrepreneurs and women-owned small businesses.
While the government encourages Salvadoran investors to invest in El Salvador, it neither promotes nor restricts investment abroad.
El Salvador has bilateral investment treaties in force with Argentina, Belize, BLEU (Belgium-Luxembourg Economic Union), Chile, Czech Republic, Finland, France, Germany, Israel, Republic of Korea, Morocco, the Netherlands, Paraguay, Peru, Spain, Switzerland, United Kingdom, and Uruguay. El Salvador is one of the five Central American Common Market countries, which have an investment treaty among themselves.
The CAFTA-DR entered into force in 2006, between the United States and El Salvador. CAFTA-DR’s investment chapter provides protection to most categories of investment, including enterprises, debt, concessions, contract, and intellectual property. Under this agreement, U.S. investors enjoy the right to establish, acquire, and operate investments in El Salvador on an equal footing with local investors. Among the rights afforded to U.S. investors are due process protections and the right to receive a fair market value for property in the event of expropriation. Investor rights are protected under CAFTA-DR by an effective, impartial procedure for dispute settlement that is transparent and open to the public.
About El salvador solar incentives
As the photovoltaic (PV) industry continues to evolve, advancements in El salvador solar incentives have become critical to optimizing the utilization of renewable energy sources. From innovative battery technologies to intelligent energy management systems, these solutions are transforming the way we store and distribute solar-generated electricity.
When you're looking for the latest and most efficient El salvador solar incentives for your PV project, our website offers a comprehensive selection of cutting-edge products designed to meet your specific requirements. Whether you're a renewable energy developer, utility company, or commercial enterprise looking to reduce your carbon footprint, we have the solutions to help you harness the full potential of solar energy.
By interacting with our online customer service, you'll gain a deep understanding of the various El salvador solar incentives featured in our extensive catalog, such as high-efficiency storage batteries and intelligent energy management systems, and how they work together to provide a stable and reliable power supply for your PV projects.
Related Contents
