Country Presentation 2018 OUR SERVICES Information about - PowerPoint PPT Presentation

Country Presentation ● 2018

OUR SERVICES • Information about • Identification of real • Facilitate and expedite Nicaragua and business estate options for government procedures opportunities • Information about business locations • Customized information • Directory of suppliers of business opportunities in packages related goods and the Caribbean Coast • Organization of site visits: services through our regional meetings with companies • Support and facilitation office PRONiCaribe and institutions • Support with information on the structure of operational costs and fiscal charges Assessment and Implementation of Aftercare decision making the project PRONicaragua is the Official Investment Promotion Agency of the Government of Nicaragua.

COUNTRY PROFILE Capital Managua Area 130,373 km 2 Official Language Spanish Population 6.3 million Currency Córdoba Exchange Rate (2018 Average) C$31.55 = US$1.00 Time Zone UTC/GMT – 6 hours Región Central / Central Region Región Pacífico/ Pacific Region Región Caribe/ Caribbean Region Source: BCN

STRATEGIC LOCATION

2017 ECONOMIC FIGURES Gross Domestic Product US$13.81 billion (4.9% growth vs 2016) GDP per capita US$2,160.6 Exports US$5.19 billion FDI Inflows US$1.46 billion Gross International Reserves US$2.76 billion (2.6 times the monetary base) Inflation 5.68% Devaluation of Currency 5% annual vs. US Dollar Sources: BCN, MIFIC, and PRONicaragua

ECONOMIC GROWTH Gross Domestic Product Real GDP Growth (%) 16.00 2012 2013 2014 2015 2016 2017 13.81 14.00 6.5 4.9 4.8 4.8 4.7 4.9 13.18 12.61 11.88 12.00 10.98 10.53 9.77 10.00 8.76 US$ Billion 8.50 8.30 8.00 6.00 4.00 2.00 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 In the last 6 years, Nicaragua's GDP has grown an average of 5.1 percent. Source: BCN .

GDP GROWTH IN THE REGION HONDURAS GDP 2017: 3.9% GUATEMALA Average of 6 years: 3.5% GDP 2017: 3.2% Average of 6 years: 3.5% NICARAGUA EL SALVADOR GDP 2017: 4.9% GDP 2017: 2.4% Average of 6 years: 5.1% Average of 6 years: 2.0% PANAMA GDP 2017: 5.3% COSTA RICA Average of 6 years: 6.3% GDP 2017: 3.9% Average of 6 years: 3.7% Source: BCN and ECLAC

MACROECONOMIC STABILITY Nicaragua maintains positive working relations with different multilateral organizations such as the International Monetary fund (IMF), World Bank (WB), the Inter-American Development Bank (IDB) and the Central American Bank for Economic Integration (BCIE). • In February 2018, Standard & Poor's ratified B+ rating for credit, local and foreign currency. The outlook is stable. • In July 2017, Moody´s upgraded Nicaragua's credit rating outlook from "stable" to "positive" and maintained the B2 rating. • In August 2017, Fitch Ratings ratified its B+ rating for Nicaragua with a stable outlook. “The macroeconomic policies implemented by the Government of Nicaragua are positive, and should serve as an example for Latin America” Min Zhu, Deputy Managing Director of the IMF

FOREIGN DIRECT INVESTMENT Foreign Direct Investment Inflows 10% compound annual growth rate 1.60 1.46 1.45 1.43 1.38 1.35 1.40 1.24 1.20 0.94 1.00 US$ Billion 0.80 0.63 0.60 0.51 0.43 0.40 0.20 - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 In 2017, the sectors that attracted the highest FDI revenues were: industry, financial, commerce and services, telecommunications and mines. Source: MIFIC, BCN and PRONicaragua

EXPORTS Total Exports 7% compound annual growth rate 6.00 5.20 5.19 4.92 4.83 4.84 4.79 5.00 4.30 US$ Billion 4.00 3.44 2.75 3.00 2.63 2.00 1.00 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 In 2017, the main export destinations were: the United States, Central America, Mexico, the European Union, and Venezuela. Source: BCN..

MAIN EXPORT PRODUCTS 2017 Main Export Products (% of total value) Textile and Apparel (30.6%) Cigars and Tobacco (4.0%) Automotive Harnesses (11.4%) Dairy Products (3.5%) Coffee (9.8%) Sugar (3.4%) Beef (9.8%) Peanuts (2.2%) Gold (6.3%) Beans (1.4%) Source: BCN and CNZF

AN IDEAL EXPORT PLATFORM Access to 1.5 billion people Free Trade Agreements Preferential Access Agreements Solidarity Alliance Agreements Central American Common Market Agreements under Negotiation Source: MIFIC

MARKET ACCESS Nicaragua constantly seeks to increase its access to the world’s most important markets in order to consolidate itself as the ideal export platform. Agreements Countries United States, Central America with Dominican Republic, Free Trade Agreements Mexico, Panama, Taiwan, Chile, South Korea and European Union Nicaragua, Guatemala, El Salvador, Honduras, Costa Rica and Central American Common Market Panama; additionally, free movement of capital, services and people among CA-4 countries Generalized System of Preferences Japan, Norway, Canada, Russia and Switzerland Cuba and Ecuador with bilateral preferences Partial Scope Agreements Venezuela and Colombia with unilateral preferences in favor of Nicaragua Venezuela, Ecuador, Granada, Saint Lucia, Bolivia, Cuba, ALBA agreement Antigua & Barbuda, Dominica and Saint Vicent and the Grenadines Canada, ALADI (Argentina, Bolivia, Brazil, Chile, Colombia, Agreements currently been negotiated Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela, and Cuba) Source: MIFIC

PUBLIC SAFETY INDICATORS Crime and Theft as a Major Problem for Doing Business in The Americas in 2017 El Salvador 19.5 Jamaica 15.5 Homicide Rate in Central America Guatemala 14.0 (per every 100,000 inhabitants) Honduras 13.9 Mexico 12.9 2015 2016 2017 Dominican R. 10.8 120 Peru 8.0 101 Venezuela 100 7.5 81 Panama 5.6 80 60 59 57 Colombia 5.6 60 44 United States 4.9 35 40 27 26 Paraguay 4.0 12 12 11 11 10 20 8 9 7 7 Chile 3.4 0 Brazil 1.9 Nicaragua Panama Costa Rica Guatemala Honduras El Salvador Uruguay 1.7 Costa Rica 1.4 Nicaragua 1.0 Ecuador 0.9 Argentina 0.7 Canada 0.0 0.0 5.0 10.0 15.0 20.0 25.0 Sources: Commission of Police Chiefs and Directors of Central America, Mexico , the Caribbean and Colombia; World Economic Forum

LABOR FORCE Average of Formal Employment 1000 914 857 900 773 800 710 Thousands of employees 673 700 623 578 600 535 504 493 500 400 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Indicators Population under 39 years old 76.1% Unemployment* 3.3% Labor Force 3.2 million Underemployment* 42.7% Source: BCN and INSS. *NIDE - 2017.

MINIMUM WAGE Salaries include social benefits Sector Monthly in US$ Hourly in US$ Construction, Financial Establishments and Insurance 418.18 2.00 Electricity, Gas and Water, Commerce, Restaurants and Hotels, 342.74 1.64 Transport, Warehouse and Communications Mines and Quarries 335.60 1.61 Fishing 284.13 1.36 Free Zones Regime Industry 257.03 1.23 Community, Social, Domestic and Personal Services 261.96 1.26 Manufacturing Industry 251.26 1.20 Federal and Municipal Government 233.03 1.12 Micro and Small Craft Industry and National Tourism 200.77 0.96 Agricultural* 186.66 0.90 Source: MITRAB. 2018 average exchange rate. *Does not include food

MODEL OF DIALOGUE AND CONSENSUS The Government of Nicaragua, the private sector and workers coordinate efforts and design strategies to: 1. Promote economic development 2. Increase employment 3. Reduce poverty The model is based on the joint monitoring of the Government, workers and private sector representatives, to follow up on agreements and promote better working relationships. Constitution Tripartite Agreement Laws The model of dialogue and Signing of tripartite More than 100 laws passed consensus has been agreement between by consensus with the included in article 101 of the government, private sector Superior Council of the Political Constitution of and workers to determine Private Enterprise (COSEP) Nicaragua minimum wage levels business umbrella organization

DEVELOPING THE ENERGY SECTOR Goal 2023 Since 2007, the Nicaraguan government has striven to increase generation capacity, expand coverage and create green energy as part of its country development strategy. 2018* 2007 36% 46% 29% 54% 64% 71% Installed Capacity: 819 MW Installed Capacity: 1,500 MW Installed Capacity: 1,942 MW Non Renewable Energy Renewable Energy Installed capacity has increased 83% from 2007 to 2018. Coverage reached 94% of the national territory in 2018 vs 52% in 2007 . Source: INE Fuente: Instituto Nicaragüense de Energía (INE).*Datos a Septiembre 2015 *Data to January 2018

LEGAL FRAMEWORK FOR FOREIGN INVESTMENT The Foreign Investment Promotion Law (Law 344) gives investors fundamental guarantees including: • Full currency convertibility • Freedom to expatriate all capital and profits • No requirement for a national partner • Non discriminatory treatment for foreign investors • Full protection of intellectual property rights, patents, and brands • Access to loans through banks Additionally, the Mediation and Arbitration Law (Law 540) offers two alternate methods to the judicial process to expeditiously resolve any dispute resulting from contractual relations between parties.