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Published by the CIPS Network of the National Association of REALTORS®
Third Quarter 2003
El Salvador Works! A View from Inside
El Salvador, located in the middle of the Americas, is a most strategic center of opportunities.
Economic Reforms in Place
This beautiful country has streamlined and liberalized its economy through privatization, deregulation, cracking down on corruption, the implementation of market-oriented economic reforms, and the adoption of the U.S. dollar as legal tender. The result is that per capita incomes in El Salvador have grown ten times faster in the 1990s than in the 1980s.
Such reforms have not only made the country a global example of a successful development strategy, but have also turned El Salvador’s financial system into one of the most sophisticated and secure in Central America. As a result, Moody’s recently granted El Salvador its coveted “investment grade” credit rating, while the Heritage Foundation and Wall Street Journal Index of Economic Freedom ranks the country among the two most open economies in Latin America.
More Free Trade Agreements
El Salvador has free trade agreements with Central America, Mexico, the Dominican Republic, Chile and
Panama. Similar talks are currently underway with Canada and the United States, where an agreement is being negotiated on a regional level to eliminate tariffs and other barriers to trade in goods, agriculture, services and investment. Participants will seek to complete the negotiations by December 2003. This is an important step for El Salvador as the country relies heavily on trade with the United States.
The laws that promote and protect the investment of foreign capital guarantee that both the foreign and domestic investor receive equal treatment. These laws allow for unlimited investment and permit transfers and capital to flow freely in and out of the country.
A Favorable Environment for Investors
For foreign real estate practitioners, it is important to note that the Salvadoran Constitution recognizes and guarantees the national and foreign investor the protection of their property and the right to the free disposition of the assets. For specific real estate transactional issues, NAR recommends collaborating with a broker in El Salvador affiliated with the El Salvador Chamber of Real Estate, who adhere to a Code of Ethics. NAR and the Chamber signed a bilateral agreement
in 2002.
El Salvador is a country which is advancing and progressing and offers an ideal infrastructure for all modes of transportation, energy and telecommunications requirements and a broad range of financial needs, conditions which are difficult to find elsewhere in the region. Two hours to the USA via plane and three days’ trip at sea, El Salvador’s strategic location offers opportunities to investors who seek access to the most important markets of the region. Its newly renovated international airport is considered the most modern in Central America and excellent port facilities on the Pacific Coast allow for efficient distribution.
A Thriving Populace
El Salvador’s people are its most valuable resource as evidenced by low attrition rates, a fast learning curve and low absenteeism. Moreover, there are millions of El Salvadorans who live abroad, mainly in the United States. But thanks to a strong family structure and connection to their culture, its immigrants keep close ties to their home country and as a result, they send money back home to relatives in the country in an amount exceeding $2 billion annually.
Currently, 92 percent of these funds are being spent on consumer goods and the government is making an effort to revert some of these funds into more tangible assets, including real estate. Industry professionals—especially U.S. REALTORS®—involved in international real estate are in a perfect position to take advantage of turning these remittances into real estate investments. There are millions of Salvadorans living in the United States, and REALTORS® have both the tools and the alliances to assist Salvadoran immigrants with purchasing a home not only in the USA, but in El Salvador as well.
Turning remittances into real estate investment will help strengthen economic ties between the countries, strengthen the Salvadoran housing market, and generate income for real estate professionals in both countries. REALTORS® who become involved in these capital flows opportunities, can find out just how well El Salvador works.
PROESA, the Office of Investment Promotion in El Salvador, is a government agency that assists foreign investors and was the primary source of information for the insider view.
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